Mr. Rich Checkan - Chairman and Chief Operating Officer (COO) of Asset Strategies International - predicts that gold prices will fall in the short term, although the current context theoretically still supports precious metals.
According to Mr. Checkan, next week is the time for the Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday, and it is likely that the Fed will keep interest rates unchanged. He said this is a suitable decision in the context that interest rates are at 3.5%, while official inflation is about 2.5%, equivalent to a real yield of about 1%.
In the context of ongoing wars and not having much momentum to deposit money into term deposits instead of holding gold, next week's announcement should have been just a minor event," Mr. Checkan said.
However, this expert believes that the market may still react negatively if the Fed keeps interest rates unchanged. According to him, investors may see this as a disadvantageous signal for gold, thereby creating pressure to cause prices to adjust down in the short term.
Sharing the same cautious view, Mr. Sean Lusk - co-director of trade hedging at Walsh Trading, said he is closely monitoring the relationship between stocks, gold, energy and US Treasury bond yields.
According to Mr. Lusk, bond yields are rising, stocks are weakening, while precious metals tend to fluctuate in the same direction as stocks, similar to the prolonged period of increase in the past three years. He believes that the market currently does not show strong enough safe-haven demand, as gold prices have not yet been able to conquer new peaks.
He also pointed out that in the past two weeks, when oil prices fell, stocks and precious metals also increased. Conversely, when the trend reversed, gold went down with the stock market. According to him, the current decline is not too strong, but the market has not yet shown a clear upward momentum, because each recovery wave is quickly sold off.
The expert said that investors are in a state of waiting to see which direction the conflict with Iran will take and how long it will last. He said that the current statements show that the possibility of reaching an agreement soon is not high.
According to Mr. Lusk, another reason putting pressure on the price of precious metals is that many investors and traders are holding large buy positions. In the context of stock market declines and increasing instability, it is understandable that they are narrowing their positions.
Most of the increase in gold and silver in the past three years has been in the same direction as stocks, not the opposite. And now that process is being untangled. When stocks plummet and adjust, metals also fall" - he said.
Mr. Lusk also noted that the energy market has been quite quiet for many years, especially since 2022, due to oversupply. However, war is changing this balance, thereby creating more variables for the financial and commodity markets.
However, he believes that for investors who are optimistic about the long-term prospects of gold and silver, the current period may be the time to observe more instead of rushing to buy in. According to him, after the adjustment process is completed, the market may enter a strong upward phase lasting several months.
In the short term, Mr. Lusk predicts that gold prices may fall below the 5,000 USD/ounce mark before recovering, and then continue to face selling pressure. "I think the market will continue to decline. It seems gold prices will continue to go with stocks for a while longer," he said.
From another perspective, Mr. Kuptsikevich believes that the weak response of gold to the conflict in the Middle East mainly stems from the upward momentum of the USD and US Treasury bond yields.
According to him, pressure on precious metals is increasing in the context of the Fed's ability to cut interest rates decreasing, while expectations of other major central banks continuing to tighten policies are rising due to the oil price shock.
Therefore, this may continue to be a suitable period for large investors to gradually take profits after a prolonged upward cycle of about two and a half years.
From a technical perspective, he said that the 50-day moving average has played an important supporting role for gold prices over the past two years and is currently around the 4,950 USD/ounce mark. If the price breaks through this zone, the market may enter a months-long downward cycle, similar to periods in 2020 or 2022.
