Gold prices are facing a volatile trading week as the market simultaneously monitors geopolitical tensions, the developments of the USD, global stocks and a series of monetary policy meetings of major central banks.
Although the short-term trend is not really clear, some experts still believe that the precious metal still has an opportunity to increase, and may even suddenly appear in a upward direction if selling pressure weakens.
Darin Newsom - senior market analyst at Barchart. com - believes that gold is still in a short-term downtrend on the daily chart, but the fundamentals of the market are still leaning in a positive direction.
According to him, central banks around the world continue to buy gold amid tensions between the US and Iran that have not cooled down. This is a factor that could support gold prices, especially when selling pressure from investment funds decreases next week.
Newsom said that if selling pressure cools down, the gold futures contract market may recover thanks to expectations of a "gap transaction" - that is, prices increase rapidly when significant resistance is lacking. However, he noted that selling pressure may return as prices approach the 50-day moving average.
It should be added that the June futures contract has not surpassed this technical indicator since March 18," Newsom said.
Optimistic views were also given by Mark Leibovit - publisher of VR Metals/Resource Letter - in a concise but decisive way. He emphasized: "INCREASE, INCREASE, INCREASE", and said that the market is about to witness a surprise in the upward direction.
Meanwhile, Marc Chandler - managing director at Bannockburn Global Forex - is more cautious when saying that gold prices may break through in both directions next week. However, the current correlation between gold and stocks is leaning towards a positive scenario for precious metals.
Chandler said gold has stagnated in the past week, thereby ending a 4-week streak of gains. According to him, if it breaks the 4,600 USD/ounce mark, gold's technical outlook will weaken. Conversely, if it exceeds 4,915 USD/ounce, the price may signal a return to the 5,100 USD/ounce zone.
He also noted that next week there will be 5 central banks in the G10 group holding policy meetings, including the Fed, the Bank of Canada, the Bank of Japan, the European Central Bank and the Bank of England. However, the market does not expect these agencies to change interest rates.
Another notable point is the diễn biến of the stock market. Chandler said strong corporate profits in the US are supporting US stocks, while Japan's Nikkei index is at a record high. The 30-day correlation between gold fluctuations and the S&P 500 index is above 0.50, close to the highest level of the year.
This shows that in the current period, rising stocks do not necessarily pull gold down. On the contrary, if cash flow continues to flow to large assets in the context of instability, gold can still benefit.
The above forecasts show that gold prices are in a sensitive zone. The 4,600 USD/ounce mark is considered a threshold that could weaken technical prospects if broken, while the 4,915 USD/ounce zone is the trigger point for expectations to return to 5,100 USD/ounce.
With buying power from central banks, geopolitical risks and the possibility of selling power from funds weakening, the scenario of gold prices rebounding next week is still left open by many experts.
