Gold prices plummet but the long-term uptrend remains unchanged

Long-term price increase trend remains unchanged

Currently, some analysts note that gold's support above $3,300/ounce shows potential strength in the market, even as the cattle side faces difficulties.

Lukman Otunuga - Senior market analyst at FXTM said: "Gold is still dominating below 3,400 USD/ounce. Purchasers may counterattack, but prices need to push above $3,360/ounce and above $3,400/ounce."

Investors began taking profits on Thursday as gold prices tested resistance at $3,400/ounce. Selling pressure increased on Friday after economic data showed that the US economy created 139,000 jobs in May, exceeding consensus forecasts. At the same time, the unemployment rate remained unchanged at 4.2%, and the salary increase was higher than expected.

Although the labor market is slowing, economists believe that the latest non-farm payrolls report will not force the US Federal Reserve (FED) to cut interest rates.

"The slowdown in the labor market has been quite smooth so far, without many surprises. If job growth continues like this, the Fed could still be in waiting and watching mode," Jeffrey Roach, chief economist at LPL Financial, said in a note.

As the employment data was released, attention turned to the inflationary side of the economic plan, with the release of the consumer price index (CPI) for May next week. However, the data is still not expected to support pre-school interest rate cuts.

A hotter CPI is expected to strengthen the US dollar and cut expectations of a Fed rate cut, leaving gold vulnerable, while a weak CPI could push gold prices higher, Otunuga said.

Meanwhile, Michael Brown - Senior Research Expert at Pepperstone said that although the Fed will maintain a neutral stance until at least the end of the year, gold is still an attractive asset.

Despite strong growth in other assets, gold remains resilient, which shows demand whether from central banks diversifying their reserves or from market participants still wanting to have some protection in their portfolios, he said.

Tom Bruce - Macro Investment Strategist at Tanglewood Total Wealth Management, said that although gold seems comfortable trading within a range, resisting at 3,400 USD/ounce and supporting at 3,200 USD/ounce, investors should look to add gold to their portfolios when prices go lower.

In the end, the uptrend remains the same as we continue to see strong investment demand. Even without a driver for the increase, gold could still increase as central banks continue to buy and diversify away from the US dollar," he said.

Looking at the USD, Bruce said that in the current context, the greenback is likely to decrease, which will benefit the gold metal.

Gold is stuck, but other precious metals are breaking out

While gold is consolidating in a new range, silver and platinum are attracting a lot of attention. Silver prices could end the week near $36 an ounce, up 9% from last weekend and the highest level in 13 years.

Meanwhile, platinum has gained 11% this week as prices surpassed $1,150/ounce. The precious metal is reaching its highest price in the past 3 years.

Both metals attracted great attention when they continued to trade at strong discounts against gold.

Investment demand is rising, as both metals are expected to face serious supply shortages this year. In this context, analysts say silver and platinum are both attractive value options.

The strong gap between the white metal and gold shows that the price of silver reaching $40/ounce is just a matter of time, said Mike McGlone, a precious metals market expert.

The ceiling around $1,100/ounce for platinum has been holding since 2021, which could be an obstacle on the path to the next resistance level of around $1,300/ounce. The previous threshold of around $1,000/ounce may have turned into important support," said Mike McGlone.