Gold prices closed a week of strong fluctuations when continuously under intertwined impacts from geopolitical tensions in the Middle East, US inflation developments and the Fed's monetary policy expectations.
At the beginning of the week, gold prices rose to near the 4,580 USD/ounce threshold thanks to safe-haven demand in the face of instability related to the US-Iran conflict. However, the upward momentum quickly weakened as the USD strengthened and the market awaited important US inflation data.
Selling pressure increased from midweek after new US airstrikes on Iran, causing oil prices to rise sharply, raising concerns that inflation will drag on and the US Federal Reserve (Fed) may maintain high interest rates for longer. At one point, gold prices plunged to a weekly low of 4,365.85 USD/ounce, the lowest in two months.
However, market sentiment improved significantly at the end of the week when information emerged that the US and Iran made progress in negotiating a ceasefire extension. Cooling oil prices, falling US bond yields and easing inflationary pressure helped gold rebound, reaching at one point 4,594.92 USD/ounce before closing the week at 4,539.03 USD/ounce.
The latest survey by Kitco News shows that Wall Street analysts have returned to an optimistic view of gold. Up to 75% of experts predict gold prices will increase next week, while only 17% believe that the precious metal will decrease in price.
Many experts believe that if the peace process between the US and Iran continues to be strengthened, oil prices may fall further, thereby easing inflationary pressure and creating conditions for gold to recover. In addition, concerns about US budget deficits, the trend of diversifying central bank reserves and the need to hedge against geopolitical risks are still long-term supporting factors for the precious metal.
Next week, the focus of market attention will be a series of US economic data, especially the non-farm payrolls report released at the end of the week. This result will play an important role in shaping the Fed's interest rate expectations and the next trend of gold prices.
Technically, the 4,400 USD/ounce zone continues to be considered an important support threshold for the market. If this level is maintained, gold is likely to head towards the 4,600 - 4,630 USD/ounce zone in the short term. Conversely, if selling pressure increases and the price breaks through the support zone, the market may face the risk of deeper correction.
