(Kitco News) – Gold prices slid lower this week as the combination of a hawkish Fed and a relatively contained Middle East conflict saw investors sell positions with each passing day.
Spot gold kicked off the week trading at $3,450.03 per ounce, and the open proved to be the high point for the yellow metal. By 3:00 a.m. EDT, spot gold had already slid to $3,411 per ounce, and the North American open saw bullion prices slide below $3,400.
While the following days didn’t see any more dramatic selloffs, gold was unable to gather any real momentum either. Prices bounced between $3,375 and $3,400 per ounce through Wednesday morning, with the Fed’s hawkish hold and updated projections driving the yellow metal down to a fresh weekly low of $3,365 by the North American market close.
By 2:15 a.m. early Thursday morning, spot gold touched a fresh weekly low of $3,350 per ounce, but this price proved attractive to buyers, who drove the yellow metal back up to $3,377 by 6:30 a.m. EDT.
After the North American close, it was Asia’s turn to sell bullion, with spot gold falling from $3,368 per ounce at 9 p.m. to $3,346 by 11:00 p.m. Thursday evening, and to the ultimate weekly low of $3,341 by 2:30 a.m. EDT.
But gold prices still had one surprise left, as spot gold shot from $3,344 per ounce at 8:45 a.m. Eastern all the way up to $3,370 just one hour later as investors decided long positions would be wise heading into a geopolitically fraught weekend.
From there, gold prices saw very little movement, oscillating in a very tight $8 range for the duration of the Friday trading session.
The latest Kitco News Weekly Gold Survey showed industry experts evenly divided on gold’s near-term prospects, while retail traders retained their slight bullish bias.
“Up,” said Rich Checkan, president and COO of Asset Strategies International. “Because I can’t be wrong three weeks in a row😊. No, seriously, because of the heightened tensions as a result of the escalation of hostilities in the Middle East, and because the correction in gold is currently overdone.”
“I am neutral on gold for the coming week,” said Colin Cieszynski, chief market strategist at SIA Wealth Management. “Gold has been up and down lately, around war developments. Depending on what happens, gold could have a significant move in either direction or not; it’s difficult to predict at the moment, so I am taking a neutral stance.”
“Up,” said Darin Newsom, senior market analyst at Barchart.com. “I don’t see anything changing longer-term for gold as a safe-haven market. Yes, gold could see a short-term selloff, but there will be continued buying interest emerging as the global situation, both political and economic, is increasingly chaotic.”
“Unchanged,” said Adrian Day, president of Adrian Day Asset Management. “A slowdown in Chinese non-official buying has been offset by a pick-up in Western buying. With heightened geopolitical tensions, we would not be selling, but look for flat-to-down trading in the next week, absent some unexpected new impetus.”
Adam Button, head of currency strategy at Forexlive.com, said the ups and downs of the precious metals markets reflect the ebbs and flows of geopolitical risk, and under the circumstances, he’s loath to pick a direction either way.
“Gold is a Middle East trade right now,” he said. “I think the people buying gold right now are buying because they’re fearful of war in Iran. Tell me what’s going to happen in the war, and I’ll tell you what’s going to happen with gold.”
Button said that even if gold fails to break above the April highs, “it’s still a win for gold to be hanging around here,” and the longer-term supportive factors will kick in again.
“I think the gold market eventually circles back to the trade war and the budget,” he said. “I think you get back to the trade war, U.S. budget, even AI as drivers.”
“But right now, you don’t want to get caught on the wrong side of the headlines.”
Looking ahead to next week’s key inflation data, Button doesn’t see the May PCE report as a major risk event for gold.
“When you look at those Fed forecasts, they don’t show PCE inflation getting back to 2% even in 2027,” he said. “And is one month going to shake them off? I think we have a pretty good idea, after CPI and PPI, where PCE inflation will fall. I don’t see PCE as much of a market-mover next week.”
This week, 16 analysts participated in the Kitco News Gold Survey, with Wall Street returning to a neutral overall position after geopolitical developments failed to boost bullion prices. Six experts, or 38%, expected to see gold prices rise during the week ahead, while five analysts, or 31%, predicted a price decline for the yellow metal, and another five analysts, representing the remaining 31%, saw gold trading sideways next week.
Meanwhile, 258 votes were cast in Kitco’s online poll, with Main Street maintaining its slight bullish majority from last week. 138 retail traders, or 54%, looked for gold prices to rise next week, while 55, or 21%, expected the yellow metal to slide lower. The remaining 65 investors, or 25%, saw prices consolidating during the week ahead.
After central bank rate decisions dominated the economic news landscape this week, next week’s focus will be squarely on the health of the U.S. consumer, with housing, inflation, and confidence data on the docket.
Monday will see the release of S&P flash PMI for June, with Tuesday bringing the latest Consumer Confidence index along with Fed Chair Powell’s testimony before the House Financial Services Committee. Then on Wednesday, markets will receive New Home Sales for May, while Powell testifies before the Senate Banking Committee.
Thursday will see the release of weekly jobless claims, durable goods orders and pending home sales for May, as well as final U.S. Q1 GDP. The week ends with the Friday morning release of PCE Core Inflation for May.
Marc Chandler, managing director at Bannockburn Global Forex, said he believes gold could test some medium-term lows during the week ahead.
“Counter-intuitively, despite the escalation of the Israel-Iran war, gold sold off,” he said. “The 2.3% drop was the largest weekly loss in five weeks. The Dollar Index rose for the first time in three weeks. The precious metal slipped below the 20-day moving average before the weekend ($3350 spot) but has not settled below it this month. Still, chart support is seen in the $3290-$3295 area.”
“A break of $3265 could signal a more prolonged consolidative/corrective phase that could spur a test on $3200,” Chandler warned.
Sean Lusk, co-director of commercial hedging at Walsh Trading, was looking at the big move higher in gold that began before the North American open on Friday morning.
“The news really is a little bit bearish for gold near-term, with no rate cuts and probably a hawkish view from the Fed,” Lusk said. “But the dollar’s down a little bit. I think you’ve got low volume trading today, because of the holiday yesterday, you just don’t have any follow-through.”
Lusk said attempts by the Trump administration to find a diplomatic solution to the Israel-Iran conflict was bearish for gold. “But the funds, a lot of longs here are defending their position on dips. They’re not going to pound this thing into the weekend. Why would you? The there’s just too much uncertainty going on all over the place; that’s going to keep the market somewhat supported here.”
Still, Lusk sees the medium-term trend for gold and the other precious metals as definitively downward.
“Coming into month- and quarter-end, you could see a wipeout,” he warned. “We’ve all had no new news on trade this week, it’s all been geopolitical. I’m just not seeing a lot in other markets here that’s offering clues. The war being in its eighth day, we really haven’t seen any safe haven rush into gold. It’s more getting long energy – or in this case, probably getting out of your shorts in energy – has been all the rage. And rightfully, because Iran matters, and if they get shut down, you could really see a significant rally in [oil] prices. But that doesn’t mean gold has to go with it.”
“You’ve got these other metals like platinum and palladium that have had huge rallies,” Lusk added. “Silver’s had a breakout and traded back up over $37, but just found no love at those levels and we pulled back a little bit.”
Turning to interest rate policy, Lusk said we may finally see some divergence between what’s going on in the equity market and what’s going on in gold.
“You’ve had all the major players here cut rates, and their stock market has outperformed our indices,” he said. “The reason for that is because they have cut. Are they going to continue to cut? I think there may be a pause. If foreign stock markets are performing a whole lot better, especially in the EU, China, and other places, what would be the cause for further cuts? So the international appeal for gold – outside of all the geopolitical stuff we already know about – you can make a strong case that a top may have been made here, and look out below.”
“History has told us that it’s way uglier on the way down than on the way up,” Lusk warned. “I would not be surprised if we revisited the April lows by the end of the third quarter. We were just at $2,640 at the end of December.”
“This recent move higher from the May lows at $3,151, we haven’t blown through the monthly high at $3,477,” he said. “We’ve gotten close, within a dollar or so last week, and then poof, right back down.”
Lusk said the 50-week moving average in the $3,337 area is a big level that has to hold. “We’re $50 above that currently, so we’re not even close to key support,” he said. “You blow through those key areas, it could be down at $3,187 really quick, the 100-week moving average.”
Fawad Razaqzada, market analyst at StoneX Bullion, was surprised that gold prices sold off this week.
“Out of all weeks it could have corrected itself, this week shouldn’t have been it, the bulls would argue,” he said. “For that reason, there is some sign of weakness creeping into gold. But to declare an end to the bull trend when Iran and Israel are at each other’s throats would be a brave call by anyone. The trend is still bullish, and key support levels are still holding firm. Thus, it is far too early to declare an end to the bullish gold trend, especially ahead of the weekend when things could heat up again in the Middle East.”
From a technical perspective, Razaqzada said that $3350 represents key support for gold, as this was formerly resistance and where the 21-day exponential moving average is found.
“Below $3350, the next downside target is at $3300, marking the prior lows,” he said. “Below that, the bullish trend line that has been in place since the start of the year will be in focus next. In terms of resistance, $3400 is the key level to watch on the upside. Above it, $3430 is the next level of resistance where gold has struggled to close above. Beyond that, there’s not much further resistance until the April all time high of $3500. As things stand, the gold forecast remains bullish from a technical standpoint.”
“Down,” said Alex Kuptsikevich, senior market analyst at FxPro. “Gold rallied 4% at the start of the Israel-Iran conflict due to a surge in demand for safe havens. However, the bulls’ enthusiasm there has gradually waned. The precious metal is poised to record its sixth consecutive monthly gain, which is the longest winning streak in two decades. Its prices are close to record highs. All this suggests that it is overbought and that alternatives should be sought.
Kuptsikevich noted that investors have started to buy platinum and silver. “Prices for these metals are rising as their reserves are depleted, shortages occur, and demand from industry and jewellery remains high,” he said. “The transfer of capital within the sector has forced gold back into a consolidation range of $3,100–3,400.”
He pointed out that gold prices also took a hit from the Fed this week. “In the updated forecasts, seven FOMC officials do not expect a reduction in the federal funds rate in 2025, which supports bond yields,” Kuptsikevich said. “In March, there were only four such officials. This is bad news for precious metals that do not generate interest income.”
“DOWN, unless we break back above the formation mentioned in the Lower time frame below,” said Michael Moor, founder of Moor Analytics. “In a Higher time frame: we are still in an overall bull trend from August of 2018, and likely in the later stages. Part of this is a prediction I made of $151 minimum, $954 (+) maximum from $2,148.4—of which we have attained $1,361.5. This is ON HOLD. On a Medium time frame: The break above 31482 warned of strength for days—we rallied $328.1. The trade above 32214 projects this upward $100 (+)—we rallied $254.9. The above are ON HOLD. The trade above 33520 (-2.6 tics per/hour) projects this upward $72 minimum, $225 (+) maximum—we have attained $75.7 so far.”
“On a Lower time frame: The failure back below 34465 brought in $90.3 of pressure,” Moor added. “On 6/16 we left a bearish reversal above—we have come off $79.6 from the 34358 open. The trade below 34046 (+4 tics per/hour) has brought in $48.4 of pressure. The trade below 33754 (+2.4 tics per/hour) warns of continued pressure; but decent trade back above will warn of decent strength.”
And Kitco Senior Analyst Jim Wyckoff believes gold will see new gains next week. “Steady-higher as charts still bullish overall, and risk aversion remains somewhat elevated.”
At the time of writing, spot gold last traded at $3,368.75 per ounce for a loss of 0.05% on the day and 2.08% on the week.
