World gold price movements last week
Gold prices witnessed another week of volatility, when the initial hunting for cheap goods (bottom-fishing) and safe-haven demand gave way to another strong sell-off.
The reason is strong US economic data, persistent inflation, a more solid USD and expectations that the Federal Reserve (Fed) will raise interest rates have pushed this precious metal back to 4,000 USD, before a last-minute surge brought prices close to the threshold of 4,100 USD.
Spot gold opened the trading week at 4,142.13 USD/ounce on Sunday evening. This upward momentum pushed gold to the week's highest level of 4,220.82 USD/ounce on Monday morning, but the recovery quickly weakened as the USD strengthened and the market continued to assess a more drastic response by the Fed to inflation.
Selling pressure accelerated on Tuesday and Wednesday, with gold prices falling below the $4,100 mark and then fleetingly losing the $4,000 threshold as traders prepared to welcome a series of US economic data on Thursday.
Spot gold prices finally set a weekly low of $3,959.38/ounce on Wednesday afternoon, after expectations of a stronger Fed interest rate hike and technical selling overwhelmed the remaining safe-haven demand.
Gold is trying to stabilize again on Thursday after the May PCE price index showed inflation to increase by 4.1% compared to the same period last year, while the number of initial jobless claims fell to 21.5 million, thereby reinforcing the view that the Fed still has very little room to loosen policy.
Friday brought a stronger recovery as escalating tensions back in the Strait of Hormuz pushed oil prices up and somewhat sparked gold buying demand due to geopolitical risks, but this move was still not enough to completely erase the week's decline.
After failing to decisively regain the 4,100 USD mark, spot gold closed the trading week about 10 USD away from this threshold, recording strong momentum at the closing time.
Gold price forecast for next week
This week, 18 analysts participated in a gold price survey. Most experts on Wall Street remained pessimistic as gold recorded its fourth consecutive week of decline.
5 experts, equivalent to 28%, expect gold prices to increase next week; while 8 others, accounting for 44%, forecast prices to fall. The remaining 5 analysts, equivalent to 28%, predict that this precious metal will maintain a sideways trend.
At the same time, 238 votes were recorded in Kitco's online poll. Small investors have given up optimism in the face of concerns about interest rate hikes.
The results show that 89 retail traders, equivalent to 37%, expect gold prices to rise next week; while 109 people, equivalent to 46%, predict the yellow metal will fall in price. The remaining 40 investors, accounting for 17% of the total, expect the market to enter an accumulation phase next week.
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