Monday, as the dollar held firm after data showing improving U.S. wage growth offset an overall weaker payroll report, maintaining expectations of two rate rises this year.
Analysts say a key for the gold market next week simply will be what happens around the $1,300-an-ounce level - whether the upward momentum will continue after Friday’s U.S. jobs report, or whether bullish futures traders will decide to start exiting positions to capture profits.
Comex June gold temporarily got above $1,300 early in the week for the first time in 15 months as the U.S. dollar index hit a 15-month low. The yellow metal then fell back on profit-taking.
But after a weaker-than-forecast 160,000 rise in U.S. April nonfarm payrolls on Friday, the metal is challenging $1,300 again. Just before 1 p.m. EDT, June gold was at $1,295.70 an ounce, up $5.20 for the week.
“We’ll get momentum to the upside if we can close above it,” said Sean Lusk, director of commercial hedging Walsh Trading.
“It cuts back the pace and number of (U.S. Federal Reserve) rate hikes we see for the remainder of this year and next year,” Lusk said. “That’s why we (gold prices) continue to get bid.”
This week, 660 people participated in Kitco’s online gold survey. Of those, 418 voters, or 63%, said they expect to see higher prices next week; at the same time, 159 people, or 24%, said they expect to see lower prices next week; and 83 people, or 13%, are neutral on the market.
Out of 35 market professionals contacted, 16 responded, of which nine, or 56%, said they are bullish on gold. Meanwhile, five experts, or 31%, said they are bearish and two (13%) were neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
“I’m expecting next week to be a pivotal time for gold with a strong possibility the metal’s price will break through resistance around $1,300 an ounce to establish a new trading range between $1,300 and $1,350,” Jeffrey Nichols, senior economic advisor for Rosland Capital, told Kitco News.
“As it sinks in that the economy is weaker and the Fed unlikely to notch up short-term rates anytime soon — and perhaps not at all this year — gold will increasingly find support and the technical picture become more supportive, particularly with upward momentum continuing to define the market,” he explained.
China's gold reserves stood at 58.14 million fine troy ounces at the end of April, up from 57.79 million fine troy ounces at the end of March, the central bank said.
Hedge funds and money managers raised their net long positions in COMEX gold and copper contracts in the week to May 3, U.S. Commodity Futures Trading Commission data showed on Friday.
Reference: Reuters, Kitco
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