The gold market entered a new trading week in a cautious state, after the precious metal lost its previous upward momentum. Experts believe that the tougher stance of the US Federal Reserve (Fed), the risk of interest rates rising again and the diễn biến of the USD are putting significant pressure on gold prices.
According to Kitco News' weekly gold survey, sentiment on Wall Street has shifted to negative. This week, 10 analysts participating in the survey, of which only 1 person, equivalent to 10%, predicted gold prices would rise. Up to 7 experts, accounting for 70%, believe that gold prices will fall. The remaining two experts, equivalent to 20%, predict that the precious metal will move sideways.
Some experts say that the risk of price decline still prevails. Ms. Nicky Shiels - Director of Metal Research and Strategy at MKS PAMP - said that the latest Fed meeting did not provide supporting factors for gold.
According to her, the increase from the 4,000 USD/ounce area is increasingly like a short-term technical recovery, rather than a structural reversal.
Ms. Nicky Shiels warned that until the market becomes more clear about policy decisions in the next 6 weeks, the Fed's statements and press conferences should be understood as more hawkish than previously expected. This means that gold's gains may continue to be sold, instead of being chased.
Mr. Michael Moor - founder of Moor Analytics - also leans towards the scenario of gold prices falling in the coming days. From a technical perspective, he said, the downward trend may still continue if gold does not overcome short-term resistance zones. A maintained price gap may create more negative signals for the market.
Meanwhile, Mr. Adrian Day - Chairman of Adrian Day Asset Management - said that gold prices may "not change but fluctuate strongly".
According to him, the tone at the Fed meeting and the statements of new Chairman Kevin Warsh surprised the market. Investors will need more time to absorb this change in the coming days.
We will have to wait until the next meeting to see which direction the Fed will take. In the meantime, the peace agreement in Iran, although still fragile, along with the continuous buying activity of central banks and Tether, will support gold prices in the low zone," said Adrian Day.
However, there are still experts who make quite positive forecasts. Mr. Rich Checkan - Chairman and CEO of Asset Strategies International - believes that gold prices may increase again.
According to him, the recent adjustment has been pushed too far. The next direction of gold prices will depend heavily on the peace process and the details to be completed in the near future.
If the process towards a more sustainable peace continues to be maintained, gold will benefit, regardless of what Chairman Warsh does at the Fed," Mr. Rich Checkan said. He added: "I bet on peace and I bet on gold.
This week, investors will follow a series of important US economic data to further assess the monetary policy outlook of the Fed. The announcement schedule begins with S&P Global's preliminary PMI index for June. After that, the market will pay attention to new home sales in May.
Notably, the final figures on US Q1 GDP and the US PCE inflation index will be released this week, along with the number of weekly jobless claims and May durable goods orders. At the end of the week, the market continued to receive the June Consumer Confidence Index from the University of Michigan.
These data may directly affect interest rate expectations. If inflation persists or economic data shows that the US economy is still strong enough to withstand it, the Fed may maintain a tougher stance for longer. Then, the USD and US bond yields may be supported, creating more pressure on gold.
Conversely, if data shows weakening growth or inflationary pressure cools down significantly, gold may receive support as expectations of policy easing return. In that context, the $4,000/ounce mark continues to be considered an important psychological zone for the gold market this week.
