Gold prices have just experienced a week of strong fluctuations, at times falling close to the 4,000 USD/ounce mark. However, many experts believe that the precious metal may have bottomed out in the short term and is facing a chance of recovery this week.
According to Mr. Marc Chandler - Managing Director of Bannockburn Global Forex, gold prices on the spot market once fell to nearly $4.024/ounce last week, the lowest level since November last year. However, the recovery in the last few days of the week helped gold prices rise again.
Mr. Chandler believes that momentum indicators are in a state of being stretched, but have not really reversed. In the context of many meetings of the G10 central banks this week, especially the first meeting of the US Federal Reserve (Fed) under Chairman Warsh, the market may continue to fluctuate. However, this expert said, he tends to increase gold holdings if prices hit a new low.
Sharing the same positive view, Mr. Adrian Day - Chairman of Adrian Day Asset Management - said that the possibility that gold has bottomed out is quite clear, although not entirely certain. According to him, as the Iranian conflict gradually comes to an end, the USD may lose its role as a safe haven, thereby supporting gold prices.
If oil prices cool down, inflationary pressure and the risk of interest rate hikes may also be reduced. Mr. Adrian Day said that in the context that the Fed is likely to keep interest rates unchanged, this scenario is not enough to create an immediate strong recovery, but still leans towards the possibility that gold prices will increase rather than decrease.
Mr. Rich Checkan - Chairman and CEO of Asset Strategies International - also predicts that gold prices will rise this week. According to him, the 4,000 USD/ounce mark has been maintained as gold prices rebound.
If a peace agreement related to Iran appears, gold prices may increase more sharply. Even without an agreement, he still believes that gold is likely to increase, although the amplitude may be more modest.
Mr. Checkan noted that gold prices may fluctuate in the middle of the week due to a meeting of the Federal Open Market Committee (FOMC). However, if the Fed keeps interest rates unchanged in the context of CPI at 4.2% and PPI above 6%, the precious metal may be supported.
Meanwhile, Mr. Daniel Pavilonis - senior commodity broker at StoneX Group - said that analyzing oil price movements shows that the bottom of the precious metal group may have appeared. According to him, a decrease in oil prices may help the market reduce concerns about inflation and interest rates, thereby improving the outlook for gold.
Mr. Pavilonis also emphasized that even in a high interest rate environment, gold still has room to increase because the precious metal may be undervalued compared to the hot stock market. According to this expert, the factors that supported gold before Iranian tensions escalated remain, including high global debt and reversal risks in the stock market.
Mr. Colin Cieszynski - chief market strategist at SIA Wealth Management - is also optimistic about gold prices this week. According to him, technically, gold has successfully tested the support zone near $4,000/ounce and is rebounding. This shows that a new uptrend may have begun.
If there is a peace agreement and oil prices continue to fall, concerns about inflation and interest rate hikes may cool down. This will benefit the precious metal" - Mr. Colin Cieszynski said.
Some more cautious opinions suggest that the gold market may still fluctuate strongly in the short term, especially before the Fed's policy meeting. However, the common point in the positive forecasts is that the 4,000 USD/ounce zone is being considered an important support threshold. The fact that gold prices maintained this level and recovered has helped strengthen expectations that the precious metal may enter a recovery phase this week.
In the context of the USD, oil prices, inflation and monetary policy continuing to dominate the market, analysts believe that investors still need to be cautious. However, if the Fed keeps interest rates unchanged and geopolitical risks cool down, gold prices may receive more support in the coming sessions.
