Gold price skyrockets, opportunity to break out

Gold prices ended the week above $2,900/ounce, up about 1.6% from last Friday. Some analysts believe that there needs to be a new factor to push prices above $3,000/ounce.

Global instability due to the constantly changing tariff policies of US President Donald Trump and the risk of a trade war are supporting gold prices. However, many experts say that these factors have partly reflected in the market.

In addition, investors are also monitoring the impact of new spending packages in Europe on gold. This week, the European Union (EU) announced a fund worth €1,000 billion for countries to increase military spending. Germany also plans to invest more in defense and infrastructure.

Gold prices could stagnate as we wait to see if the US enters a period of stagnant inflation. Financial expansion in Europe could affect investment flows, but I see no reason why gold prices cannot continue to rise.

Currently, many factors supporting prices have been reflected, so we need to wait and see the economic impact from current developments - Ole Hansen, head of commodity strategy at Saxo Bank commented.

The return to Europe has pushed capital into the EUR, sending the USD index to its lowest level since Donald Trump was elected president. The index fell 2.5% for the week - its biggest decline since July 2022.

In this context, Nicky Shiels - head of metal research and strategy at PAMP exchange - commented that gold in EUR is an attractive investment in the medium and long term thanks to the increasing spending trend.

Despite a strong weakening of the USD, gold prices have not yet taken advantage of this opportunity due to a lack of clear US economic data. Economic recession concerns eased somewhat on Friday as the jobs report showed the labor market remained quite strong.

Last month, the US economy added 151,000 jobs, just slightly below the experts' forecast of 160,000.

Federal Reserve Chairman Jerome Powell also affirmed that the Fed remains neutral and is not in a hurry to cut interest rates, as the labor market remains stable and inflation remains high.

However, some analysts warned that the risk of recession has not disappeared but is only delayed. Naeem Aslam - Investment Director at Zaye Capital Markets - commented that there is a 20-25% chance that the US will fall into recession this year due to persistent inflation and the possibility of the Fed making policy mistakes.

Consumption psychology is weakening, the University of Michigan index fell 10% in February. In addition, Mr. Trump's tax policy could still disrupt the situation. In this context, gold prices have a chance to surpass $3,000/ounce, continue to increase by 28% in 2024 and be supported by strong demand from central banks, he said.

Paul Ashworth, chief North American economist at Capital Economics, predicted the US economy could decline in the first quarter of this year but there would be little technical recession (no growth in two consecutive quarters): We do not expect the US to fall into recession at the moment, he wrote in the report. However, there are still many unpredictable factors, such as the impact of Elon Musks changes related to the federal government on GDP.

Despite some short-term challenges in gold prices, many experts are optimistic that any correction is a buying opportunity.

Lukman Otunuga, market analyst at FXTM, noted that the latest employment data has reduced expectations for a rate cut in May to below 50%. This could put pressure on gold prices in the short term.

Gold is still on the rise for the week, but buyers need to keep prices above $2,856.40/ounce. Next week, US CPI data, Trump's tax policy and the risk of a US government shutdown could cause strong fluctuations in gold prices.

Technically, prices are fluctuating within a narrow range with support at $2,890 and resistance at $2,930. If it exceeds 2,930 USD, the price may move towards 2,950 USD and the psychological mark of 3,000 USD. If it falls below $2,890, prices could retest the $2,860 and $2,835 regions, he said.