Gold prices are facing the risk of further adjustment as many experts believe that the market has not escaped downward pressure, especially in the context of the USD increasing, US bond yields rising and geopolitical developments still making investors cautious.
Mr. Michael Moor - founder of Moor Analytics - predicts that gold prices are likely to continue to fall next week, unless the market shows technical signals strong enough to reverse to increase again. According to him, although gold has rebounded significantly from the recent bottom, this recovery momentum is still not strong enough to confirm that a new upward trend has formed.
Technical signals currently show that the market is still in a state of fluctuation, but the risk of downward correction is still slightly higher if the price cannot surpass important resistance levels. Conversely, if gold clearly breaks through key technical thresholds, the market will have a basis to expect a stronger upward momentum.
Sharing the same cautious view, Mr. Jim Wyckoff - senior analyst at Kitco - said that gold and silver prices fell sharply in the early trading session in the US, mainly due to the impact of the rise of the USD index and US Treasury bond yields.
According to him, gold and silver buyers continued to be disappointed when these two markets could not attract safe-haven cash flow, although risk avoidance sentiment in the market was still high and crude oil prices increased sharply.
Technically, Mr. Wyckoff believes that the next upward goal of the buying side is to bring the price of gold for April delivery to close above the strong resistance level of 5,000 USD/ounce. In the opposite direction, the short-term downward goal of the selling side is to pull the price below the strong technical support zone of 4,300 USD/ounce.
According to him, the nearest resistance zone is currently at 4,700 USD/ounce, followed by 4,750 USD/ounce. Meanwhile, the first support is at 4,600 USD/ounce, followed by the overnight bottom of 4,580.40 USD/ounce. Mr. Wyckoff scored the market at 5.0, reflecting a tug-of-war but still leaning towards a weak trend in the short term.
Meanwhile, Mr. Lukman Otunuga - Senior Market Analyst at FXTM - said he will monitor the initial support zone at 4,600 USD/ounce, because gold will continue to be very sensitive to inflation concerns and the possibility of higher interest rates when energy prices escalate.
On the graph, if the closing price of the day is definitely below 4,600 USD, gold may retreat to the 4,450 USD zone. Conversely, if 4,600 USD continues to play a reliable supporting role, the price may recover towards the 4,800 USD mark," he said.
He also believes that the safe haven attraction of gold may ultimately become a more important driving force than the increased opportunity cost due to higher interest rates.
Gold could regain its safe haven role if the blockade of the Hormuz Strait lasts long enough to become a growth shock, threatening the global economy. The US Federal Reserve (FED) is in a difficult position when balancing between inflation caused by conflict and signs of a weakening labor market," he said.
Mr. Otunuga added that when the market is closed for trading on Friday, the US non-farm payroll report in March will shape the psychology for next week. Although the market is closed, the US government does not recognize Easter as an official holiday, so the jobs report is still released.
The minutes of the FED's March monetary policy meeting will also attract attention next week, but the biggest focus will be the Personal Consumption Expenditure (PCE) index - the FED's favorite inflation measure. The trading week will close with a series of other inflation data, including the US consumer price index (CPI).
