World gold price movements last week
Gold prices brightened in the first sessions of the week, but this precious metal gradually weakened as the trading week passed. Each increase was blocked by hotter inflation data, increased bond yields and stronger USD, while geopolitical risks only created limited support.
Spot gold prices opened the week at 4,687.50 USD/ounce, but the market quickly reversed to decrease as traders shifted their attention from safe-haven demand to persistent inflation, US Treasury bond yields rose and the USD strengthened.
After falling to 4,650 USD/ounce at one point overnight, gold prices rebounded sharply when the North American session at the beginning of the week opened, setting a weekly peak above 4,768 USD/ounce right before 8 pm on Monday US Eastern time. However, optimism on the precious metals market did not last long, as gold prices in the following days struggled to hold the 4,700 USD/ounce mark.
The first major fluctuation appeared on Tuesday, after the US consumer price index (CPI) increased by 0.6% in April and 3.8% compared to the same period last year. This data pushed spot gold prices back to the 4,700 USD/ounce range, amid markets narrowing expectations of the Fed easing monetary policy.
Selling pressure increased on Wednesday after production prices rose 1.4% in April, pulling gold prices down to near the lowest level of the session around 4,680 USD/ounce. Traders see PPI data as another signal that inflationary pressure is spreading.
By Thursday, gold prices tried to stabilize as retail sales increased by 0.5% and unemployment claims increased to 211,000 claims. However, recovery is still limited as the USD continues its 4-day rally, while the market is watching the US-China meeting to find new signals about the direction of geopolitical risks.
The strongest fluctuation occurred on Friday, when spot gold prices broke the 4,600 USD/ounce mark due to a sharp increase in bond yields. The yield of 10-year US Treasury bonds rose to 4.54%, while the USD continued to strengthen.
The sell-off appeared amid prolonged tensions in the Middle East and oil prices maintained above $100/barrel, as traders focused on the inflation impact from the Iran war as well as the risk that the Fed would maintain high interest rates for longer. Spot gold prices bottomed out the week at 4,511 USD/ounce right when the North American session opened, before trading around 4,539.2 USD/ounce at the end of the week.
Gold price forecast for next week
Weekly gold survey results show that Wall Street analysts are almost no longer expecting short-term prospects for gold prices, while individual investors still maintain an upward trending view despite the decline of precious metals.
This week, 13 analysts participated in Kitco News' gold survey. Wall Street sentiment fell deeply into a pessimistic zone after gold prices failed to maintain many important support levels.
Only 2 experts, equivalent to 15%, predict that gold prices will increase next week, while up to 10 people, accounting for 77%, believe that prices will decrease. The remaining expert, equivalent to 8%, predicts that gold prices will remain flat next week.
Meanwhile, Kitco's online poll recorded 29 votes. Individual investors on Main Street still maintained a majority optimistic view, despite recent weakening of gold prices.
There are 17 individual traders, equivalent to 59%, expecting gold prices to increase next week; 4 others, accounting for 14%, forecast that the precious metal will depreciate. The remaining 8 investors, equivalent to 28%, believe that gold prices will remain flat next week.
Notable economic data for next week
Next week's economic data includes reports on housing, manufacturing and consumer sentiment, along with the minutes of the latest US FOMC meeting. However, the main story in the precious metals market is likely still the ongoing conflict in the Middle East, as well as the impact of this factor on oil prices and bond yields.
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