World gold prices entered a new trading week in a state of strong struggle as the market was simultaneously affected by rising US bond yields, expectations that the Fed will continue to maintain higher interest rates for longer, and unpredictable developments in the Middle East.
Closing last week, spot gold prices fluctuated around the 4,500 USD/ounce range after a series of strong fluctuations. This precious metal continuously faced selling pressure as investors increased bets that the US Federal Reserve (Fed) may not soon cut interest rates, even the possibility of raising interest rates again began to be mentioned by the market.
According to CME Group's FedWatch tool, the probability of the Fed raising interest rates by another 0.25 percentage points by the end of this year has now increased significantly after a series of inflation data hotter than expected.
Consumer inflation and wholesale inflation in the US both increased sharply in April as energy prices escalated due to the Iranian conflict, causing the Hormuz Strait to continue to be disrupted. Brent oil prices maintaining above the 100 USD/barrel range are increasing concerns that inflationary pressure will continue to spread in the US economy.
In that context, US 10-year bond yields are still hovering near the highest level for more than a year, while the USD maintains significant strength. These are factors that put direct pressure on gold because this precious metal does not generate profits.
However, analysts believe that gold has not yet lost its shelter role as the global financial market continues to face many instabilities.
Mr. Ole Hansen - Commodity Strategy Director at Saxo Bank - said that oil prices, bond yields and the USD are currently the three main drivers for the gold market.
According to him, if Middle East tensions continue and bond yields rise too sharply, the market may begin to worry about fiscal risks and economic growth, thereby supporting gold's return.
Meanwhile, many large financial institutions still maintain a positive outlook for gold in the medium and long term.
Goldman Sachs experts continue to maintain the gold price target of 5,400 USD/ounce for the end of 2026 thanks to strong gold buying demand from central banks and the trend of diversifying global reserves.
The latest report from the World Gold Council (WGC) also shows that physical gold demand and buying activities of central banks remain at a high level.
However, in the short term, many experts warn that gold may still face additional adjustment pressure if US economic data continues to be positive and the Fed signals tougher.
Next week, the market will pay special attention to the Fed meeting minutes, US Q1 GDP data, PCE index and consumer confidence data to better assess interest rate prospects.
All developments related to US-Iran negotiations and the possibility of fully reopening the Strait of Hormuz will also continue to be factors that could cause gold prices to fluctuate sharply.
Technically, many experts believe that the 4,450 - 4,500 USD/ounce zone is currently an important support threshold for gold. If this zone is lost, gold prices may fall deeper into the 4,370 USD/ounce zone.
In the opposite direction, if geopolitical tensions cool down, oil prices fall and US bond yields weaken, gold may soon return to the resistance zone of 4,600 - 4,700 USD/ounce next week.
