This week, the gold market continues to be dominated by slow and stable trading, and the gold price has once again been traded in the narrow range between $2300/oz and $2340/oz. #Gold Technical Analysis#
After opening at $2321.87/oz, spot gold hovered around $2330/oz or higher from Sunday night last week to early Tuesday morning this week. However, the bullish attack was repulsed, and the market remained in the range of $2320/oz during the day on Tuesday. The bear market eventually took the lead in overnight trading in North America and pushed spot gold to its lowest point of the week at $2295.23/oz.
Later, the spot price tested the psychological key point of $2300/oz several times and rebounded to near $2330/oz in overnight trading on Thursday.
On Friday morning, before the US market opened, spot gold soared to this week's high of $2339.78/oz, then fell back and oscillated around $2320/oz in the North American trading session.
The latest Kitco News gold weekly survey shows that most industry experts plan to wait and see next week, while small investors have different views on the short-term prospects of gold.
FxPro's Senior Market Analyst Alex Kuptsikevich is pessimistic about gold as the price has fallen below the 50-day moving average.
Kuptsikevich said, "Gold and its related markets may be at the intersection of weak economic data (slowing growth and weak inflation) and less dovish Fed policies." He said, "This is the worst combination for risk demand and may trigger widespread selling including gold."
Marc Chandler, Managing Director of Bannockburn Global Forex, believes that after this week's steady performance, gold may make progress next week.
He wrote, "After falling to below $2300/oz last Wednesday to Thursday, gold rebounded to near $2340/oz over the weekend and fully recovered last week's losses."
Chandler said this move is enough to extend gold's fifth consecutive month of gains. "Since the end of Q3 2023, it has only fallen in one month (in January)."
He now believes that gold could further recover in the next few days. "Breaking $2350-2360/oz will change the market atmosphere and may indicate a return to $2400/oz." He said, "Two macro developments may help gold, namely the first round of French elections, which may result in indecisive parliaments, and the US employment report, which may be disappointing and will be released next weekend."
James Stanley, Senior Market Strategist at Forex.com, said, "I still think it's a bullish market. The monthly candlestick chart looks more and more like a hope for a callback, and the resistance level of $2075/oz in spot gold seems like a logical callback target. However, at this point, the bulls are still defending $2300/oz, and unless there is a change, I still tend to be bullish."
Kevin Grady, President of Phoenix Futures and Options, said the market could be quiet next week, but that also means greater volatility risks.
He said, "A lot of people have already started their vacations, which has already started this week, and they will rest all weekend. I think you will see a lot of people holding their positions."
"The problem is that I think this will lead to volatility because the market dynamics will be driven by algorithms that read headlines," he said. "I think based on the shape of the data, there may be some volatility. There will be a lot of data coming out during the holiday week, which will be interesting. You will see a lot of junior traders on the trading desk, many of whom are not block orders. Nobody will really take risks. I think next week will be calm."
Grady acknowledged that geopolitical events such as escalation in Ukraine or the Middle East could quickly disrupt the market in this environment.
"That's why you will see a lot of people, I think, hold flat. If you're going to leave the trading desk, you're going to reduce that position. You don't want to sit on the beach and read news while your position is being cleared. That's not where you want to be. I think a lot of people won't trade too much next week, but algorithms will drive the market."
Grady said he doesn't even expect many traders to pay attention to Friday's non-farm payroll report. "Even those who are still here on Friday, when London closes, around 11:30 [EDT], I think the market will calm down. Everyone will leave early."
This week, 12 Wall Street analysts participated in the Kitco News gold survey. The consensus for next week is that caution is the greatest courage. Four experts said they expected gold prices to rise next week, accounting for 33%, while two analysts or 17% predicted the price would fall. The remaining six experts, exactly 50% of the total, were unwilling to believe in the direction of gold in the next week.
Meanwhile, Kitco's online poll received 178 votes, with divergent opinions from Main Street investors on the short-term prospects of gold this week, similar to last week's Wall Street opinions. 86 retail traders, accounting for 48%, expect gold prices to rise next week. Another 50 people, accounting for 28%, expect gold prices to fall, while the remaining 42 respondents, accounting for 24%, believe that prices will continue to consolidate horizontally over the next week.
(Image source: Ktico)
Independence Day in the United States will make next week's economic data unusual, with important releases compressed on both sides of the holiday. On Monday, the market will receive the ISM Manufacturing Purchasing Managers' Index, followed by the initial Eurozone CPI and JOLTS job vacancy data on Tuesday. ECB President Christine Lagarde and Fed Chairman Jerome Powell will also give speeches at a central bank meeting in Portugal. On Wednesday, the market will focus on the ADP Employment Report, weekly jobless claims data, ISM Services Purchasing Managers' Index, and the minutes of the June FOMC meeting. After the July 4 holiday, US traders will wake up on Friday morning to the June non-farm payroll report.
Darin Newsom, senior market analyst at Barchart.com, remains optimistic about next week's gold price.
He said: "I will continue to be bullish, because the August contract still looks like it has room to continue its short-term uptrend." He said: "Last Friday morning, the August contract broke through its previous four-day high of $2,349.70 per ounce, and the next short-term upside target is $2,370.40 per ounce. We need to remember that the midterm trend of the contract is still downward, apparently forming a triple bottom of $2,304.20 per ounce (week of June 3), $2,304.50 per ounce (week of June 10), and $2,304.70 per ounce (this week)."
"There's an old saying, maybe it's just because I'm old enough to remember, 'Three bottoms are broken,' " Newsom warned.
Everett Millman, chief market analyst at Gainesville Coins, said he expects gold to continue to be trapped in recent position patterns until something shakes the broader market.
"Now a lot of people look at gold as the inverse of the stock market risk asset, even though it's not a perfect one-to-one relationship," he said. "I think that's the biggest driver right now, especially as people confuse the stock market's performance, especially what we're seeing now, just a top of the stock market starting, just the kind of start of the big start in the wrong direction."
"This isn't a perfect foundation, but we're still not far from new historic highs until the stock market sees a sharp decline or correction, I think gold will continue to hang on."
Millman said that if there are no broader market concerns, the price of gold will plummet, "but as long as those seven big tech stocks hang on, we can point out the headlines, we can point out the indexes, say 'oh, the US stock market is still in a bull market.' More and more, I think this is the main reason to maintain gold's position, at least we haven't seen a big drop or correction in the stock market, at least not a sustained one."
"But at the same time, it's not all good news outside, right?" he added. "I think that even if you're still bullish, even if you see the stock market possibly rising before the end of the year, a lot of people will at least admit that there are challenges and concerns under the surface or under the hood of the stock market right now."
"Given those two factors, I think it makes sense for gold to be choppy," Millman said. "Not completely sold off because it's not like we see new all-time highs [in stocks] every day, but we're not far from them. Until we see extreme volatility in the stock market, I wouldn't be surprised if gold just continues to consolidate and linger within the range it's stuck in."
Millman also said that the market's shape next week will be strange, with most important data released on Wednesday, followed by the July 4 holiday, and then the market will reopen on Friday morning with the release of the jobs report.
"This is definitely worth paying attention to," he said. "Considering that trading volumes may be lower, this doesn't need to push gold too much. But of course, this is likely to be a temporary move, and we may see it disappear or quickly correct in the opposite direction, because it's not based on economic fundamentals."
Millman said that in the medium term, the market will continue to digest the impact of conflicting inflation data from around the world.
"We got this fairly consistent PCE report, and the CPI data in Canada, maybe in the UK, actually shows inflation is rising and moving in the wrong direction as they begin to cut rates," he said. "I think this divergence, the improvement in US inflation versus the deterioration or setback in inflation in other Western countries, this divergence has to be considered. I don't think it's fully priced in. I think they're still waiting to see, maybe there's just a lag, the US data catches up."
"That's what I think is being digested right now," he said. "We just need more data. We're going to have to depend on the data, just like the Fed."
Philip Streible, director of market strategy at Blue Line Futures, is bullish on gold next week, but he said now is not the time to enter the market.
Christopher Vecchio, director of futures and forex strategy at Tastylive.com, is neutral on gold next week. "If you have gold, there's no reason to sell because prices are still above $2,200 per ounce," he said.
Tastylive.com's futures strategy and forex manager Christopher Vecchio maintains a neutral stance on gold for next week. "If you hold gold, there's no reason to sell because the price is still above $2,200 per ounce," he said.