(Kitco News) – The gold market was buffeted by inflation data, congressional testimony, tariff threats, and geopolitical developments this week, but by Friday afternoon the pressure was off and some traders were rethinking their near-term bullish strategy.
Spot gold kicked off the week trading at $2,863.31, but it quickly left that level in the dust, trading up to $2,880 per ounce by midnight Eastern, and as high as $2,905 by the North American market open on Monday morning. By 9:00 p.m. EST Monday evening, spot gold hit a new high of $2,940 per ounce.
The $2,900 level provided solid support throughout the week, as gold prices lurched up and down in reaction to each day's economic data and market-moving statements.
Tuesday morning saw the first of two days of Federal Reserve chair Jerome Powell's testimony before Congress. Gold prices had slid back down to $2,884 per ounce by 8:00 a.m., but by the time Powell took his seat before the Senate Banking Committee at 10 a.m., it was trading back around $2,900 per ounce.
Wednesday morning saw gold trading at $2,871 per ounce, its lowest level since the weekly open, but the release of hotter-than-expected CPI inflation data at 8:30 a.m. drove gold right back up to the low $2,890s, and during Powell's testimony before the House Financial Services Committee on Wednesday, it rose to $2,908 per ounce.
After a brief pullback in the middle of the afternoon, gold prices embarked on their steadiest – though not sharpest – climb of the week, rising from $2,895 per ounce at 2:15 p.m. to $2,922 just after midnight. Thursday morning’s release of hotter-than-expected PPI inflation coincided with another pullback for the yellow metal, but by the North American market close it was trading near $2,930, and after a strong performance during the Asian and European sessions, it topped out just short of $2,940 per ounce shortly after 5:00 a.m. Eastern.
This proved to be the high-water mark for gold prices, however, as its three failed attempts to break above the Monday evening high resulted in a sharp slide lower, which was only exacerbated after the retail sales report for January also disappointed. Spot gold slid dramatically from $2,932 per ounce at 7:15 a.m. EST all the way to $2,886 by 1:15 p.m., and it spent the duration of Friday's trading session within a few dollars of that level.
The latest Kitco News Weekly Gold Survey showed industry experts bullish but more divided on the yellow metal, while retail traders also moderated their calls for further price gains for gold.
“Up,” said James Stanley, senior market strategist at Forex.com. “Bulls are still firmly in control here, and I don’t think we’ve seen a top yet. I do think it’s possible that we play into a larger pullback before a $3k test in spot gold, but I’m not sure that’s a scenario to entertain just yet, and given how strong the trend has continued to push, I’m going to continue to lean bullish gold.”
“I am neutral on gold for the coming week,” said Colin Cieszynski, chief market strategist at SIA Wealth Management. “Gold has had a good run lately and technically it looks due for a pause to consolidate recent gains. Plus, it’s a long weekend and a short trading week.”
“Up,” said Adrian Day, president of Adrian Day Asset Management. “Momentum still with gold and reasons to buy remain intact.”
“Higher,” said Rich Checkan, president and COO of Asset Strategies International. “The trend is firm, and uncertainty is the constant right now. Not to mention, CPI and PPI suggest inflation has no plans to retire quietly. Gold thrives in this environment as a hedge against uncertainty and inflation. As we get nearer to $3,000, we may see some short-term pullbacks at that psychologically important level. But not yet.”
“Up,” said Darin Newsom, senior market analyst at Barchart.com. “Why? Everything. That’s the best way to put it. What else are long-term investors supposed to do when markets are being intentionally (illegally?) manipulated by the daily routine of announcing tariffs then saying the next day these tariffs are delayed, all while the fires of geopolitical instability continue to be stoked.”
“Does the fact the market is already priced at all-time highs give me pause?” Newsom asked. “No. The only shadow of uncertainty, in my mind, comes from what I call the Poseidon Predicament: When everyone runs to the same side of the boat, in this case the bullish side, the boat tends to roll over.”
Carsten Fritsch, commodity analyst at Commerzbank, is bullish on gold for next week, but advises caution. “It looks as though the recent record high may not be the last,” he said. “The proximity to the USD 3,000 mark also favors a further price increase. However, it is also clear that this will increase the correction potential.”
Bob Haberkorn, senior commodities broker at RJO Futures, said that while Friday morning’s retail sales report drove gold lower, the yellow metal was already sliding on geopolitics.
“Even before U.S. retail sales came out, the news out of Ukraine right now, with the talk of a peace deal, had it weak late yesterday,” he said. “Then you get as big of a [retail sales] miss as we saw, it adds to the case that the Fed will not cut rates in March, so a little bit of a pullback.”
“But if anything, from what I'm hearing this morning and seeing in activity, [the market] is patiently waiting to add to positions,” he added. “You don't really see selling coming into this market. I don't even know where those traders are at this point.”
Haberkorn said that a Ukraine-Russia peace deal would be great news, but it’s not the main thing the gold market is following. “I think the main catalyst for gold right now is just all the questions out there in global monetary policy and the concerns about what's going on with this gold being moved out of London and Europe to U.S., to Comex vaults,” he said. “It's definitely got everybody's ears up and wanting to be in gold, for it to trade north of $3,000.”
He said that the gold flows into the United States – and the price premium that’s driving them – have some market participants looking way past the $3,000 per ounce level.
“I’m hearing calls, people talking about $4,000 coming down the pipe here,” he said. “You don't hear it talked about as much as some of the other stuff going on, but the global market right now, with the repatriation and the pace that we're seeing it, that could be in the cards right now.”
“The next month or so is going to be pretty interesting for gold,” Haberkorn added. “Let's see how high, how fast we can get. I think we will hit $3,000 the way things are going. And will it be in the first or second quarter of this year? I think a lot of people are excited about gold and the dip today is an opportunity to add to positions.”
This week, 14 analysts participated in the Kitco News Gold Survey, with Wall Street’s bullish sentiment returning to Earth after a few weeks in the stratosphere. 10 experts, or 71%, expect to see gold prices continue rising during the week ahead, while two analysts, or 14%, predicted a price decline for the precious metal, and another two saw consolidation for gold next week.
Meanwhile, 201 votes were cast in Kitco’s online poll, with Main Street investors also pulling back on their recent bullishness while still remaining solidly optimistic on gold’s prospects. 131 retail traders, or 65%, looked for gold prices to rise next week, while another 48, or 24%, expected the yellow metal to trade lower. The remaining 22 investors, representing 11% of the total, saw gold trending sideways in the near term.
| TIME | |||||
|---|---|---|---|---|---|
| Sydney | Tokyo | Ha Noi | HongKong | LonDon | NewYork |
| Prices By NTGOLD | ||
|---|---|---|
| We Sell | We Buy | |
| 37.5g ABC Luong Bar | ||
| 5,849.00 | 5,459.00 | |
| 1oz ABC Bullion Cast Bar | ||
| 4,869.40 | 4,469.40 | |
| 100g ABC Bullion Bar | ||
| 15,520.20 | 14,120.20 | |
| 1kg ABC Bullion Silver | ||
| 1,837.50 | 1,337.50 | |
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