Short-term pressure, recovery expectation
Last week, gold prices faced strong downward pressure after a series of information from the meeting of the US Federal Reserve (Fed), along with the stance of maintaining high interest rates and tough statements by Chairman Jerome Powell. However, according to Mr. Rich Checkan - Chairman and COO of Asset Strategies International - this adjustment was predicted in advance and may only be temporary.
Mr. Checkan said that the fundamentals of the gold and silver market have hardly changed in the past month. Therefore, after the impacts of monetary policy subside, the market may enter a recovery phase after being oversold.
Inflation and geopolitics remain "backers
Sharing the same positive view, Mr. Darin Newsom - senior market analyst at Barchart.com said that the decrease in gold prices does not mean that the long-term trend has reversed.
According to him, inflation tends to increase again, while cash flow temporarily shifts to energy to hedge against risks from geopolitical tensions. However, these instability will cause investors to return to gold as a safe haven asset.
“It may not be clear what will happen next week, but at this point, I still lean towards the scenario that gold prices will increase rather than decrease,” Mr. Newsom emphasized.
Suspicions about the reason for the sell-off
From another perspective, Mr. Adam Button - Head of Currency Strategy at Forexlive. com believes that the explanation for the recent decline in gold is not really convincing.
According to him, arguments such as increased interest rates, high interest rates or tight monetary policy are not enough to explain the deep drop in gold prices. He questioned the real motives of investors when buying gold based only on expectations of interest rate cuts.
Mr. Button also emphasized that inflation is present and current fluctuations show that the market may be overreacting to short-term factors.
One of the factors Mr. Button specifically noted is the increasing geopolitical instability, especially related to tensions between the US and Iran, as well as rifts in relations between the US and NATO allies.
According to him, the collapse of global order is an important driving force for gold prices in the long term. When the situation subsides, this may become a strong supporting factor for the precious metal.
Cautious cash flow, accumulation price zone formed
In terms of trading, Mr. Button said that the market is currently monitoring the price range of 4,400 - 4,500 USD/ounce, with the possibility of fluctuating in a wide range from 4,500 - 5,500 USD in the near future.
Speculative cash flow is tending to withdraw from the ETF and futures markets, as many investors have bought in high prices before. Selling pressure from this group prevents the market from rebounding immediately.
However, buying power still appears around the low price zone, showing that long-term confidence in gold has not decreased.
Although still positively assessing gold prospects, Mr. Button believes that investors are currently standing aside to wait for more clear signals, especially from the developments of geopolitical conflicts and global financial markets.
Gold prices will rise again when there are clear signs that tensions are cooling down. But at this time, the market still needs more stability," he said.
