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Gold trading reminder: Tensions in the Middle East have helped gold prices post five consecutive positive weeks, and 70% of analysts are bullish on the market outlook.

2024-04-22

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In early trading in Asia on Monday (April 22), spot gold fluctuated within a narrow range and is currently trading around 2385.33 gold per ounce. The price of gold continued to climb 0.5% on Friday, closing at $2,390.42 per ounce, a weekly increase of 1.95%, the fifth consecutive week of gains, as the market worried about further tit-for-tat retaliation between Iran and Israel, triggering demand for safe havens.

Explosions echoed over an Iranian city earlier on Friday in what sources said was an Israeli attack, but Tehran played down the incident and said it had no plans to retaliate.

David Meger, head of metal trading at High Ridge Futures, said: "The escalation and downgrade of the situation in the Middle East has affected the market. If the situation really eases, then gold will correct or consolidate, and safe-haven buying will dry up. However, in the long term, gold's The upward trend will continue and the Fed may not cut interest rates as quickly as the market expects.”

Fed officials agreed that there is no rush to cut interest rates at this time. The market currently predicts that the probability of a rate cut in September is about 64.5%.

Research firm Antaike said gold will rise further amid strong demand prospects in major Asian countries and macro uncertainty.

Survey: Most analysts and retail investors are bullish on market outlook

The latest Kitco News Weekly Gold Survey shows that Wall Street and Main Street are still betting that gold prices will rise further despite rapid gains and a lack of pullback.

Last week, 14 Wall Street analysts participated in the Kitco News gold survey. Although there was a clear shift to the sideways camp compared with last week, there were fewer bearish analysts.

Ten experts (71%) expect gold prices to rise further in the coming week; 3 analysts (21%) believe gold prices will remain stable; only one analyst (7%) predicts gold prices will fall.

Meanwhile, Kitco's online poll, which totaled 149 votes, had mainstream investors showing some nervousness about the prospect of the precious metal trading at such high levels.

95 retail traders (64%) expect gold prices to rise in the coming week; another 29 respondents (19%) expect gold prices to fall; 25 respondents (17%) expect gold prices to rise in the coming week Showed a sideways trend.

Preview of this week - U.S. GDP and PCE data are coming

There are several major U.S. economic data this week. On Tuesday, the U.S. will release new home sales in March, and on Wednesday, the U.S. will release the monthly rate of durable goods orders in March.

On Thursday, the market will usher in the U.S. first-quarter GDP report, quarterly PCE data, weekly initial jobless claims and pending home sales data.

According to economists' estimates, the seasonally adjusted annualized growth rate of U.S. GDP in the first quarter announced on Wednesday was 2.1%, down from 3.4% in the fourth quarter.

However, models such as the Atlanta Fed's GDPNow, which provides ongoing estimates of GDP growth, suggest that growth in the first quarter may be higher than expected, at about 2.9%.

If the actual GDP growth data in the first quarter exceeds expectations, it may be bullish for the US dollar, as the market may further reduce the possibility of the Federal Reserve cutting interest rates in 2024, and may widen the divergence in the monetary policy trajectories of major global central banks.

Friday will usher in the US March PCE data, the inflation indicator monitored by the Federal Reserve.

Economists expect headline PCE to rise 2.6% year over year, up from 2.5% in February; core PCE is expected to rise 2.8% year over year, consistent with last month's data.

If the core PCE sequential data is in line with expectations, the three-month annualized growth rate may rise to 4.25% from 3.5% in February.

This could have a significant impact on Treasury rates at the front end of the curve, with the U.S. two-year note potentially surging higher and above the recent consolidation near 5%.

A technical breakout could even cause the two-year rate to move back up to 5.25% from what appears to be a bullish pennant formation.

Analyst Views

Colin Cieszynski, chief market strategist at SIA Wealth Management, said: "I am optimistic about the week ahead. Macro risks remain high at the moment and many political situations are unstable at the moment. As we have seen, I don't need much to triggering a rebound in gold prices.”

Adrian Day, president of Adrian Day Asset Management, expects gold to trade sideways in the coming week and said: "Gold's strength is noticeable in the face of central bank delays in interest rate cuts, but it will pause briefly." "I don't expect that to happen. A deep or prolonged pullback, but at least a pause for a few days.”

Dennis Gartman, author of "The Gartman Letter," sees himself as one of the gold bulls in the week ahead. “I wouldn’t be surprised if gold hits recent all-time highs in the next week or so,” he said. “Then the game starts again.”

Daniel Pavilonis, senior commodities broker at RJO Futures, said geopolitical conflicts will continue to push gold prices higher even if there is no immediate escalation.

Darin Newsom, senior market analyst at Barchart, said gold was overdue for a correction, but he still doesn't think it will happen, saying: "The market is overbought and may need to sell off to release some of the pressure that may be building. But the trend is still up, And geopolitical tensions are expected to continue to intensify between now and the U.S. presidential election in November this year, and gold may continue to look for investment safe havens.”

Senior market strategist James Stanley noted: “The $2,400 level has temporarily hindered this move, but with two failed breakouts, bulls have opened the door to profit from the breakout, but the support level continues to be bought. I don’t Determining whether this is accumulation from larger players or just interest rate expectations surrounding the U.S. FOMC, but the fact that this move continues to attract bulls to buy at support makes me think the bullish trend in gold is not over yet.”

Everett Millman, chief market analyst at Gainesville Coins, said that the situation in the Middle East has dominated the gold market and may continue to be so for some time in the absence of major economic news events.

Millman said he is thankful that this is not World War III, but the situation is still much worse than it was a week or two ago, but he believes that the geopolitical premium is definitely keeping gold prices near all-time highs. “Whenever I see gold and the dollar rising at the same time, it’s usually a very strong sign that the market is primarily driven by safe haven or quality assets, and I don’t see any other strong reason for them to be that way. "

"I think this could be very short-lived," he added. "If the situation does ease, we could see gold fall again." But right now, I think that's the main thing I want to think about. "

Millman expects the gold market to remain quite volatile in the coming week. “That being the case, I think the price range that traders and investors should be looking at has to be a little wider. If gold went up another $200 an ounce over the next week, it would still be shocking, but I think $100 both ways, $2,500 on the high end, and then A pullback to $2,250 or $2,200, I don’t think those are outside the realm of possibility.”

Mark Leibovit, publisher of VR Metals/Resource Letter, said he remains bullish in the short to medium term and sees greater gains for silver. "Gold price target remains $2,700-$2,800," Silver is an important catch-up game. $30, then $50.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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Gold trading reminder: Tensions in the Middle East have helped gold prices post five consecutive positive weeks, and 70% of analysts are bullish on the market outlook.

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