Participants in the weekly Kitco News gold survey are shaking off Friday’s slump after strong U.S. jobs data, looking for the metal to bounce next week.
They cited continuing expectations for U.S. rate cuts at some point in time, despite the jobs report, as well as gold’s technical-chart momentum prior to Friday’s pullback.
“We expect the uptrend in gold [prior to Friday] to continue,” said Phil Flynn, senior market analyst with at Price Futures Group. “A shaky global economy with weak data along with trade war fears should keep gold in its upward trend. Looking ahead, we see more chances of global economic stimulus, thereby weakening currencies and making gold more attractive vehicle to preserve value.”
Flynn said he doubts the jobs data will change the collective minds of the Federal Reserve policymakers, thus still looks for a rate cut.
“Because of the strong jobs report, some people believe the Fed may be less likely to cut,” Flynn said, commenting that this view is behind Friday’s decline in gold prices. “I don’t think the jobs report changes their concerns about a [potential] slowing economy and the trade war.”
Jim Wyckoff, senior technical analyst with Kitco, looks for gold to be steady to higher next week. “Charts still favor bulls,” he said.
Charlie Nedoss, senior market strategist with LaSalle Futures Group, also figures gold could dip some more, putting the next key downside level at the 20-day moving average around $1,383.60. He cited a strong U.S. dollar after the jobs report.
The gold market also roughly formed a double top, he added. The August futures peaked at $1,442.90 an ounce on June 25, then nearly matched that again at $1,441 on Wednesday.
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, looks for gold to be roughly unchanged next week, although he is bullish further out.
“If certain factors driving gold higher are reversed -- if for example, indications grow that the Fed won't raise rates next month -- gold could consolidate, which would be overdue,” Day said.
Afshin Nabavi, head of trading with MKS, said “it’s a bit hard to tell” what to expect from a suddenly choppy gold market, commenting that the market is in a short-term range of $1,380 to $1,440 an ounce.
“[Fed Chair Jerome] Powell testifies in front of Congress next week, where we may get a better clue on the thinking going into the July [Fed] meeting,” Nabavi said.
Reference: Kitco
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