Gold price forecast after a week of constant reversals
(Dan Tri) - After a week of alternating rises and falls with a wide amplitude, experts are giving contrasting forecasts for the gold price trend as the market remains under the influence of Fed policy and macroeconomic factors.
At the close of the trading week from July 27 to August 1, SJC gold prices were listed at 137-141 million VND/tael (bid-ask). Earlier, the market continuously fluctuated with many sessions of gains and losses alternating; at one point prices rose by as much as 1.5 million VND/tael before quickly correcting downward. Over the whole week, SJC gold fell nearly 2 million VND/tael compared with the beginning of the week.
Meanwhile, world gold prices started the week at $4,051.51/ounce and continued to edge up thanks to increased buying when prices retreated to the lower band of the recent trading range.
In Tuesday's session, the uptrend stalled as investors waited cautiously for the policy decision of the U.S. Federal Reserve (Fed). Meanwhile, oil prices remained high and prolonged inflation concerns continued to support bond yields. By Wednesday morning, gold fell below the $4,050/ounce threshold, at one point breaking through the psychological $4,000/ounce mark and hitting the week's low of $3,995.90/ounce.
The precious metal then recovered before the Fed announced it was keeping interest rates at 3.50-3.75%. However, the fact that up to three Fed members expressed support for raising rates did not add to expectations of monetary policy easing. This weakened buying momentum as investors continued to assess the Fed's message and awaited upcoming inflation data.
On Thursday, gold recorded its strongest gain of the week after the personal consumption expenditures (PCE) price index came in lower than expected, easing concerns that the Fed would keep raising rates. As a result, gold climbed back above the $4,100/ounce mark.
The precious metal peaked for the week at $4,119.82/ounce at midday Thursday. However, in Friday's session the rally was not sustained as the U.S. employment cost index came in higher than expected, pushing Treasury yields up and putting pressure on gold.
At the end of the week, after failing to hold the $4,100/ounce level, spot gold pulled back to $4,041.7/ounce. Over the week as a whole, world gold prices moved sharply but finished roughly flat compared with the start of the week.
Jewelry gold products (Photo: Huu Khoa).
Of the 17 Wall Street experts participating in Kitco's weekly gold price survey, 5 (29%) forecast gold prices would rise next week. Conversely, 6 experts (35%) said prices would fall, and the remaining 6 (35%) said gold would continue moving sideways.
On the retail investor side, Kitco's online survey attracted 184 votes: 87 people (47%) expected gold prices to rise next week, 55 (30%) predicted a decline, while the remaining 42 (23%) said the precious metal would continue to accumulate in the current price range.
James Stanley, senior market strategist at Forex.com, said the $4,000/ounce area is still playing the role of a solid support level for gold. In his view, although rising bond yields usually disadvantage the precious metal, buying has appeared steadily whenever prices fall back to around this level.
Sharing a cautious view, Colin Cieszynski, chief market strategist at SIA Wealth Management, believes gold is in an accumulation phase and will likely continue to fluctuate around the $4,000/ounce level next week.
Meanwhile, Rich Checkan, chairman and CEO of Asset Strategies International, assessed that the market has not yet had enough momentum to form a sustainable uptrend. He said the Fed's decision to hold rates, slowing GDP growth, cooling PCE inflation, widening tensions in Iran, and a stronger U.S. dollar are creating mixed effects on gold prices.
Even so, the $4,000/ounce level is still considered the bottom of the current fluctuation range, while macroeconomic factors continue to make it hard for gold to break out and may keep it in a sideways state.
Adrian Day, chairman of Adrian Day Asset Management, also said gold needs more time to accumulate before the trend becomes clearer. According to him, the market is waiting for more signals on the direction of monetary policy as well as developments in the Middle East conflict. If tensions cool, the U.S. dollar could lose part of its safe-haven role, creating more favorable conditions for gold prices.
