Gold prices are unpredictable as the market is divided between optimistic expectations and correction signals
International gold prices continued to maintain their upward momentum last week, despite a series of US economic data showing that the economy is still stable. However, this week, the gold price outlook has become more unpredictable than ever as experts and investors have made many conflicting forecasts.
Last week, gold prices reached $3,365/ounce, the highest level in nearly a month, before ending the week at $3,334, equivalent to an increase of nearly 2% compared to the previous week. Concerns about global geopolitical instability, financial tensions in the US, and the weakening trend of the USD have created significant momentum for the gold market.
Experts Divided on Gold's Next Move
According to a Kitco News survey, only 36% of experts predict gold prices will continue to rise this week, while 28% think prices will fall and the remaining 36% think prices will stay the same. This almost even ratio reflects a deep divergence in market sentiment.
Adam Button, director of currency strategy at rateslive.com, said that the weakening US dollar will continue to play an important role in supporting gold prices. He said that if the trend of selling the US dollar continues, gold will have more opportunities to extend its rally.
In contrast, Adrian Day, CEO of Adrian Day Asset Management, took a more cautious view. He said that the possibility of the Fed cutting interest rates in July, combined with central banks starting to slow their gold purchases, could put the precious metal under pressure to adjust. However, he noted that any declines would be short-lived and not too deep.
Contrasting signals from US economic data
Marc Chandler, director at Bannockburn Global Forex, also expressed pessimism about the short-term outlook for gold. He said that if the US economic reports this week continue to be positive, gold prices could completely retreat to the $3,250/ounce area.
Meanwhile, Colin Cieszynski, strategist at SIA Wealth Management, noted that the gold market has lacked a clear trend over the past two months. He also pointed out that although the market is pricing in expectations that the Fed will cut interest rates by about 0.75 - 0.8 percentage points this year, this does not mean that it will create a strong boost for gold prices as expected.
What factors will drive gold prices next week?
This week, the market will focus on key data, including:
Interest rate decision from the Reserve Bank of Australia (RBA)
Minutes of the June meeting of the US Federal Reserve (Fed)
Weekly jobless claims data in the US
In the context of the market being dominated by many opposing pulling forces, investors have not yet found a solid support to determine the next direction of gold prices in the short term.