After a week of plummeting and falling into a clear downward trend, gold and silver began to attract investors' attention again. However, although both precious metals maintained important support zones, some experts believe that investors should only be cautious in purchasing exploratoryly instead of rushing back to the market.
Talking to Kitco News, Ms. Michele Schneider - MarketGauge's Market Strategy Director - said that the recovery momentum of gold from the bottom is an encouraging sign, but she wants to see more confirmation that the market has formed a long-term bottom.
If the price can close around the current levels, it suggests it may be time for exploratory buying" - she said - "Gold and silver need to return to the moving average before it can be considered a clear buy signal.
Ms. Schneider added that the fact that gold prices fell below the 50-day moving average, followed by the 200-day moving average, has caused significant technical damage to the price chart. Therefore, investors still need to be cautious in the short term.
Mr. Simon-Peter Massabni - Business Development Director at XS. com - said that the gold price holding the $4,000/ounce mark shows that a part of long-term investors have started buying, considering the recent decline as an opportunity to accumulate.
The fact that gold prices remain above the $4,000/ounce mark reflects the presence of strategic buyers, who see each decline as an opportunity to build new positions," he said. "I also believe that the deep correction phase is coming to an end and the market is currently closer to building a new price level than entering a broader correction trend.
According to experts, gold and silver are attracting buying power before the end of the week after optimistic news that the US and Iran are approaching a peace agreement, which could end the latest war in the Middle East.
However, some experts note that the market has fallen into a similar situation before, so optimism is still restrained. Mr. Fawad Razaqzada - market analyst at FOREX. com - said that the key issue for gold is the normalization rate of the energy market and oil prices.
The strongest sell-off for gold may have passed at the present time, although that does not mean that prices will not decrease further over time, especially if oil prices do not fall sharply again," he said.
Although gold prices recovered in Friday's session, some experts are still skeptical about the ability to maintain this upward momentum. Mr. Ole Hansen said that until information is confirmed that the two sides have reached an agreement, gold prices will continue to fluctuate strongly and will face many difficulties.
He added that, despite the optimistic sentiment, it seems that the two sides in the conflict are still far apart on some issues.
Until inflation is truly controlled, uncertainty related to energy prices and the impact of this factor on inflation will continue to be a burden on gold," he said.
While geopolitical instability continues to dominate the short-term trend of gold prices, the market is waiting to see how the energy crisis and inflation concerns will affect the US Federal Reserve (Fed) under its new leadership.
Next week will be the first monetary policy decision of Mr. Kevin Warsh as the new Chairman of the US Central Bank. Some experts believe that the Fed meeting next week is one of the reasons why they are not in a hurry to strongly participate in the gold market.
High inflation is making the market strengthen expectations about the possibility of interest rate hikes before the end of the year. Currently, the market assesses the probability of the Fed raising interest rates in October at about 50%.
Although the Fed is forecast not to raise interest rates next week, some economists believe that this central bank may establish a new tightening trend, a factor that could be detrimental to gold in the short term.
There is a possibility that gold will fluctuate strongly. If he makes unexpected statements about inflation and interest rates, if his tone is tougher than expected, this will be bad news for gold" - Mr. Razaqzada said.
