(Kitco News) – Slow and steady continued to be the name of the game in the gold market this week, as the yellow metal once again traded in a narrow channel between $2,300 and $2,340 per ounce.
After opening the week at $2321.87, spot gold spent Sunday night through early Tuesday morning flirting with the high 2,330s, but the bulls’ advances were rebuffed, and after holding in the $2,320 area for the rest of the day, the bears finally took control during the overnight session. North American markets then woke up to slap spot gold down to its weekly low of $2,295.23 by 9:30 am EDT on Wednesday morning.
The spot price then saw multiple tests of the psychologically important $2,300 level before finally breaking back to the upside during Thursday's overnight trading, when it once again tested $2,330.
Friday morning brought a spike to the weekly high of $2,339.78 per ounce just before the U.S. market open, after which it pulled back and chopped sideways in the mid-2320s for the remainder of the North American session.
The latest Kitco News Weekly Gold Survey shows most industry experts planning to sit on the sidelines next week, while retail sentiment is divided on gold’s near-term prospects.
Alex Kuptsikevich, senior market analyst at FxPro, is bearish on the yellow metal as the price has moved below its 50-day moving average.
“Gold, and the markets along with it, may be at the intersection of weak economic data (slowing growth and weak inflation) and a less dovish Fed,” Kuptsikevich said. “This is the worst combination for risk demand and could trigger a broad sell-off, including in gold.”
Marc Chandler, Managing Director at Bannockburn Global Forex, thinks after this week’s solid performance, gold is in a position to make gains next week.
“Gold recovered from the dip below $2300 Wed-Thurs last week to recover back toward $2340 at the end of the week,” he wrote. “It recouped the previous week’s losses in full.”
Chandler said the move was sufficient to extend gold’s rally for a fifth consecutive month. “It has fallen only in one month since the end of Q3 23 (and that was in January).”
Now, he believes gold is poised to recover further in the coming days. “A move above $2350-60 lifts the tone and could signal a return toward $2400,” he said. “Two macro developments that could help gold are the results of the first round of the French election that make a hung parliament more likely and a disappointingly weak US jobs report at the end of next week.”
“Up,” said James Stanley, senior market strategist at Forex.com. “I think that it’s still bulls to lose, at this point. The monthly candles are looking more and more like they want a pullback and prior resistance at $2,075 for spot Gold seems a logical place to look for that to run towards. But, with that said, bulls have continued to defend $2,300 and until that changes, I’m going to favor with a topside bias.”
Kevin Grady, president of Phoenix Futures and Options, said the coming week will likely see thin markets, but that also means the risk of greater volatility.
“A lot of people right now are taking off, it’s started already, and they're going to be down for the week, big vacation week,” he said. “I think you're going to see a lot of people that are flat.”
“The issue with that is I think that's going to cause volatility because what's going to happen is the things that are going to be trading and moving the market are the algorithms reading the headlines,” he said. “I do think there's some volatility depending on how the numbers shape out. Having a holiday week with a lot of data coming out, it's going to be interesting. You're going to have a lot of junior traders on the desks, a lot of guys that are not the main guys. No one's going to really be taking risks. I think it's going to be a pretty quiet week.”
Grady acknowledged that in this kind of environment, geopolitical developments like an escalation in Ukraine or the Middle East can disrupt the market very quickly.
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