Wall Street analysts continue to issue many cautious warnings about the trend of gold prices after a strong sell-off last weekend. The biggest pressure on the precious metal currently is said to come from the high yields of US bonds, the strengthening of the USD and expectations that the US Federal Reserve (Fed) will maintain high interest rates longer than expected.
Mr. Marc Chandler - Managing Director of Bannockburn Global Forex - said that gold prices have signaled a clear weakening when falling to an 8-day low last weekend.
Gold prices have not traded below the $4,500/ounce mark since the end of March. If this zone is broken, the price may fall to $4,350/ounce," he warned.
Sharing the same cautious view, Mr. Alex Kuptsikevich - senior analyst at FxPro - said that the selling side is still controlling market trends.
According to him, the 4,700 USD/ounce zone is becoming a strong resistance level for gold, while selling pressure is increasing after the market was disappointed with the results of the US-China meeting and oil prices continued to rise.
Selling pressure may increase to the 4,350 USD/ounce zone, even with the risk of pulling prices down further," he said.
Experts at CPM Group even issued a sell recommendation for gold at the end of last week, with a short-term price target of 4,400 USD/ounce.
This analysis group believes that rising US bond yields to near-a-year highs are causing cash flow to leave assets like gold.
"If gold breaks the mark of 4,380 USD/ounce, the next stop may be 4,200 USD/ounce" - CPM Group commented.
Meanwhile, Mr. Adam Button - Head of Currency Strategy at Forexlive. com - said that the market is increasingly concerned about inflation returning as oil prices rise sharply and US economic data continues to be positive.
The market is starting to consider the possibility of interest rates rising again," he said.
According to this expert, the yield of 30-year US bonds has exceeded 5.1%, while futures oil prices continue to escalate, reflecting concerns that high interest rates will last longer.
Mr. Daniel Pavilonis - senior commodity broker at RJO Futures - also said that gold is under great pressure from widespread risk avoidance sentiment.
“The market is currently quite unstable. Yields are increasing and investors are withdrawing some of the high valuation from assets,” he said.
However, some experts still maintain a positive view on gold in the long term.
Mr. Adrian Day - Chairman of Adrian Day Asset Management - said that the supporting factors for gold in recent years have not disappeared, especially the gold buying trend of central banks.
In the long term, stable buying power from the central bank and the weakening global position of the US will continue to support gold," he said.
Mr. Darin Newsom - senior market analyst at Barchart. com - also said that last week's sell-off may have relieved most of the selling pressure in the futures market, opening up the possibility of technical recovery this week.
However, analysts generally still believe that the developments of US bond yields, the USD and the expectation of the Fed's policy will continue to be decisive factors in gold price trends in the coming sessions.
