The gold market has gone through a volatile four weeks as prices surpassed the $3,000/ounce mark and broke out to $3,500, creating a shocking increase. However, some experts are still rushing to abandon the precious metal, even though investors are starting to take profits.
After strong selling pressure overnight, gold prices ended the trading session in North America with a decrease of about 2%, fluctuating around 3,200 USD/ounce. The spot gold price listed at 1:55 p.m. on 2.5 (Vietnam time) was listed on Kitco at $3,250.4/ounce.
Some experts warn that gold prices may fall further, but many still believe that these corrections will continue to be bought in, as the uptrend that has lasted for nearly two years has not been broken.
Although this adjustment is quite strong, it is not surprising, because speculative investors have started selling since the end of March. According to the US Securities Exchange Commission, the number of net purchase contracts has decreased by 34% in the past 5 weeks, to 120,902 contracts.
The MACD has turned down and gold is still in overbought conditions, said David Morrison, senior analyst at Trade Nation. This shows that the decline is still dominant.
The $3,200 mark will be the first challenge for buyers, but this is just a beautiful round number, not a big barrier. The seller could pull the price down to $3,150 or even $3,000 an ounce to test the market's resilience, the expert said.
Experts say this reversal in gold comes from the fact that investor sentiment is gradually improving as the global economic progress progress progress is. US President Donald Trump said he is making progress in trade negotiations, the result of import tariffs initiated by him.
However, Morrison warned: "Psychology can reverse very quickly. Trump's temporary silence does not mean the trade war is over.
Aaron Hill - chief analyst at FP Markets (Australia) - also monitored the tax negotiation developments to predict the short-term direction of gold. If deals are real, cash flow will shift to risky assets like stocks or industrial goods, causing gold to lose its appeal, he said.
However, if the statements are political without concrete action, gold could quickly find a new bottom.
Hill also highlighted another factor supporting gold: the slowing economy, while the Fed remains neutral on monetary policy. Mr. Donald Trump has repeatedly called for a rate cut to maintain US economic competitiveness. With persistent inflation and a weakening labor market, the Fed is facing a difficult situation. If the NFP jobs data deteriorates, the Fed can lower its voice without being accused of being pressured by the White House, he said.
In the short term, gold could continue to face pressure if risk sentiment remains strong and NFP data is positive. But if trade talks stagnate or the labor market deteriorates rapidly, gold will soon regain its upward momentum, Hill predicted.
Bart Melek - Head of Commodity Strategy at TD Securities - also said that although gold prices may still decrease, this is an opportunity to buy.
He said favorable tax negotiations could push gold prices to $3,000 an ounce, but still expects gold prices to average $3,500 an ounce in the fourth quarter of this year.
It is now too late for trade deals to prevent economic recession and rising inflation. That means the Fed could have to cut interest rates amid rising inflation.
At the same time, the relationship between the US and strategic partners is getting worse, causing investors and central banks to gradually shift away from USD and US bonds. This will make gold even more popular again, especially as holding costs fall according to the Fed's loose policy, Melek said.
