Demand in Asia slows down and tensions in the Middle East cool down, making it difficult for precious metals to increase in the short term.
Last week, the world gold market received a lot of information, from production data, services, US employment reports to policy decisions of the Federal Reserve (Fed). Although precious metals somewhat benefited when the Fed denied raising interest rates and left open the possibility of reducing interest rates in the second quarter, the upward momentum has waned as demand in Asia slowed and Middle East tensions cooled.
In total for the whole week, gold prices decreased nearly 2%, to 2,301 USD an ounce. During the week, the price rose above the $2,340 mark several times, but failed to maintain it.
This development makes experts pessimistic about the short-term prospects. Survey of Kitco News Last weekend, analysts, bankers and traders showed that 33% predicted that gold prices would go down this week, 27% thought the price would increase and 40% expected the market to go sideways.
World gold price movements over the past month show that the market is gradually going down.
Marc Chandler – Director of Bannockburn Global Forex is part of the group that forecasts a decrease in prices, mainly due to falling demand in Asia. “I think the price will return to 2,250-2,260 USD an ounce,” he said.
“The strengthening yuan and the recent rally in Hong Kong stocks will probably reduce investors’ need to buy haven gold. The recovery of the yen will also slow down purchasing power here,” he said. Last week, the Chinese market closed for a 3-day holiday, somewhat affecting buying pressure.
Lukman Otunuga – analyst at FXTM also believes that prices are showing signs of decreasing. On May 3, after the US announced a jobs report that was not as expected, the price increased by more than 20 USD an ounce, then turned back down.
This week will be one of the weeks with the fewest economic data released of the year. The most notable event is the interest rate decision of the Bank of England.
Adrian Day – Director of Adrian Day Asset Management still believes in the market. “Prices remain firm as the Fed delays interest rate cuts. Those who are buying gold – namely central banks and depositors in China – are buying for reasons other than macroeconomic factors. traditional models. This purchasing power is very stable,” he explained.
Darin Newsom – senior analyst at Barchart.com emphasized that in the medium and long term there are still many factors supporting gold demand. “We still have inflation. Interest rates could still be reduced at least once this year, weakening the USD and creating an inflationary environment. The Middle East issue is also not resolved. And as I have said many times times, the closer the US presidential election gets, the more chaotic the world will be,” he warned.