World gold prices are facing the risk of weakening as many unfavorable factors appear at the same time, from negative technical signals to changes in global monetary policy expectations.
Mr. Marc Chandler - Managing Director of Bannockburn Global Forex - said that the precious metal is gradually losing its upward momentum. According to him, the recovery momentum from the mid-week bottom around 4, 510 USD/ounce quickly stalled when approaching the threshold of 4, 647 USD/ounce, showing that buying power is no longer strong enough to maintain the upward trend.
He predicted that gold prices are likely to return to testing the 4,495 USD/ounce zone - an important technical milestone corresponding to about half of the upward momentum since the end of March.
Notably, momentum indicators are signaling weakening as the 5-day moving average has cut below the 20-day moving average. According to Mr. Chandler, if the support zone of 4,495 USD/ounce is broken, gold prices may enter a new wave of decline, with the next target around 4,400 USD/ounce.
From a similar perspective, Mr. Alex Kuptsikevich - senior market analyst at FxPro said that the downward trend has formed since the second half of April and is still continuing.
He noted that gold prices had fallen by about 3% in the week, losing more than 4.3% before finding support around 4, 540 USD/ounce, showing that selling pressure still prevailed.
According to Mr. Kuptsikevich, the core reason comes from the fact that the market is adjusting monetary policy expectations in a tighter direction. When interest rates are forecast to remain high for a long time, the attractiveness of bonds increases, while gold - a non-profit asset - becomes less attractive.
Another worrying sign is that gold prices cannot take advantage of the weakening of the USD in recent times. According to this expert, in normal conditions, gold and USD often move in opposite directions. However, the weakening of both shows that demand for precious metals is decreasing, thereby sending a negative signal for the medium-term outlook.
Mr. Kuptsikevich warned that the 4,400 USD/ounce area will be the next important milestone. If broken, the downward trend could become the main scenario in a wide range of prolonged fluctuations, instead of just a short-term correction.
Meanwhile, the analysis group of CPM Group issued a short-term sell recommendation, with a price target of around 4,500 USD/ounce in the first half of May and a stop loss level of 4,715 USD/ounce.
According to this group, although gold prices may still fluctuate in the 4,400 - 4,950 USD/ounce range, the short-term trend is leaning towards decline as investment capital shows signs of withdrawing from many commodity markets, not just precious metals.
CPM Group also believes that market sentiment has changed significantly. While long-term political and economic risks still exist, the level of short-term concern has eased, weakening safe-haven demand. This contributes to reducing the support for gold prices.
From a macroeconomic perspective, Mr. Adam Button - Currency Strategy Director at Forexlive. com said that the stance of global central banks is becoming more "hawkish" than before. According to him, interest rate expectations have increased by about 50 basis points in many developed economies, reflecting the possibility that interest rates will remain at a higher level for longer.
He believes that central banks are currently unlikely to ignore the inflation shocks from oil prices and geopolitical tensions. This makes the prospect of policy easing more distant, thereby continuing to put pressure on gold prices.
Although there are still some opinions that gold may recover in the long term, many experts warn that in the short term, the precious metal is lacking clear momentum to break through. If important support levels continue to be broken, gold prices may enter a deeper correction phase, especially in the context that market sentiment is still cautious and cash flow has not returned strongly.
