The sell-off momentum at the end of last week when the prospect of interest rate cuts was unclear, along with a period of lack of important news could push gold prices down.
14 Wall Street analysts participate in our weekly survey Kitco and shows that sentiment towards precious metals has largely deteriorated in the near future. Only three experts forecast higher gold prices, while eight predicted a decline. Three other analysts see gold trending sideways this week.
Meanwhile, 195 Main Street investors are more optimistic about the prospects of this asset channel. 48% of retail investors predict an increase in precious metals, 26% give the opposite scenario. 21% of respondents think that market prices fluctuate horizontally.
This week is a period lacking economic news. However, investors still have some notable information such as the US’s preliminary first quarter GDP announcement, weekly unemployment benefit applications, personal income and spending reports.
Colin Cieszynski – Chief Market Strategist at SIA Wealth Management said that between the holiday season in the US and the lack of major events at the end of the month, it will be a “quiet trading week”.
Gold prices increased beyond 2,400 USD per ounce and then retreated to close to 2,330 USD at the end of last week. Image: CNBC
James Stanley – senior market strategist at Forex, believes that the market is experiencing a pullback (non-trend period).
Last week, gold prices rose above the resistance mark of 2,400 USD per ounce in the early sessions, then fluctuated and returned to close to 2,330 USD when macro data did not support it. Particularly in the weekend session, precious metals increased 0.25% during the day, but decreased 3.32% compared to the previous week.
Therefore, according to James Stanley, if the selling side prevails, precious metals are likely to reverse. But even so, this development may just be a short-term pullback in the uptrend.
Adrian Day – Chairman of the asset management company of the same name, has a more optimistic view. He expects a recovery from the massive sell-off of the past few days and gold to make another attempt to convincingly break the $2,400 mark. “Whether gold will surpass that level is still uncertain, but this week we expect a good recovery,” he said.
Meanwhile, many analysts see downside risks to gold. Marc Chandler – Managing Director at Bannockburn Global Forex, pointed out that the stronger USD and higher interest rates caused gold to sell off sharply last weekend and fall in price. In addition, US two-year bond yields extended the recovery from 4.7% to nearly 5%.
Daniel Ghali – commodity strategist at TD Securities said that the rising USD and the dim prospect of interest rate cuts in the US have sparked a wave of selling gold to take profits. However, the downward momentum will be limited.
“Not all investors who care about interest rates buy gold. Therefore, they do not have too much to sell. We think that although the market is correcting, the decrease is relatively small,” he explained. prefer.
Recently, many central banks and financial institutions poured money into gold. UBS bank recently raised its forecast that the precious metal could reach $2,600 an ounce by the end of this year. They recommend buying when the price is at $2,300 or below. The reason is that US economic data weakened in April, central banks’ gold demand increased and political instability continued.