Precious metals markets experienced significant action this week, with gold prices starting the week around $2,024 per ounce and modestly trending upwards. However, things shifted dramatically following Wednesday’s release of the FOMC statement and Fed Chair Powell’s press conference, which dashed all hope of a spring rate cut, sending gold prices sharply lower. This significant drop was followed by a rally on Thursday that saw gold reach a weekly high of $2,064.28, only to be pushed down once again on Friday morning due to a jobs report that exceeded expectations; ultimately bouncing at the $2030 per ounce mark.
The latest Kitco News Weekly Gold Survey showed a divergence in sentiment between institutional and retail traders, with most experts losing faith in gold’s short-term future. However, for retail investors, the sentiment was still mostly bullish. This indicates a broader divide in expectations for gold’s performance next week.
According to Frank McGhee, head precious metals dealer at Alliance Financial, the market is mispriced, given the strength in the U.S. labor market and the election year calendar. Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, also sees this week’s data and statements as a wakeup call for the gold market, pointing to further downside risks and the role of the U.S. labor market and the strength of the dollar.
Looking ahead, the main focus for the gold market next week will be on developments in the Middle East. Meanwhile, the only major data point for release will be Monday’s ISM service sector PMI, with markets also keeping an eye on the weekly jobless claims on Thursday for further insight into the NFP numbers.
As market participants weigh the various factors at play, there is speculation about gold having to realign with the economic realities, and there are also concerns about potential issues in the U.S. economy, particularly related to the labor market and the banking sector. Overall, it’s clear that the gold market is experiencing uncertainty and shifts in sentiment regarding future performance.
When reading the article, one insight is to pay attention to the impact of external events, like geopolitical issues or fluctuations in the banking sector, on gold prices. Additionally, there is caution about the U.S. labor market, as the strength of the economy’s data does not necessarily match people’s experiences or feelings about employment and public versus private hiring. This contrast points to important factors that could influence gold’s trajectory in the near future.
