Gold prices entered a new trading week with many intertwined supporting factors, in the context that investors continue to monitor the interest rate outlook of the US Federal Reserve (Fed), the developments of conflicts in the Middle East and a series of important US economic data.
Kitco News' weekly gold survey shows that Wall Street analysts are strongly leaning towards a scenario of gold prices rebounding. Up to 75% of surveyed experts predict gold will go up next week, while only 17% believe prices will decrease and 8% predict the market will move sideways.
The biggest driving force supporting gold today comes from expectations that the US and Iran may reach an agreement to extend the ceasefire, thereby helping to cool down oil prices and reduce inflationary pressure. If energy prices continue to weaken, the market may reduce concerns about the possibility that the Fed will have to raise interest rates further in the last months of the year.
In addition, the foundational factors supporting gold have not changed. The demand for gold from central banks remains high, while concerns related to US public debt, the trend of diversifying global foreign exchange reserves and geopolitical risks continue to create support for the precious metal.
This week, the focus of market attention will be a series of US labor data, especially the non-farm payrolls report released at the end of the week. A weaker-than-expected payroll may increase expectations that the Fed will maintain or ease monetary policy in the future, thereby supporting gold prices.
In the opposite direction, if jobs and economic growth data continue to show that the US economy maintains good resilience, the USD and bond yields may increase again, putting pressure on gold in the short term.
Technically, the 4,400 - 4,450 USD/ounce zone continues to be an important support area. The strong rebound in gold prices after testing this zone last week shows that buying power is still present. If maintained above the above support level, gold prices may head towards the 4,600 - 4,650 USD/ounce zone next week. Conversely, losing the 4,400 USD/ounce mark will open up the risk of deeper correction.
In general, the main trend of gold prices next week is assessed to be more positive after a strong correction lasting from the end of February. However, the market will still fluctuate strongly according to information related to the Fed's policy and the negotiation process between the US and Iran.
