Gold price may increase next week

According to analysts, the biggest factor driving the rally gold price is the weakening of the greenback. The US dollar remains relatively strong, but is down 3% from its peak at the beginning of the month.

Analysts note that the US dollar is depreciating against the euro as the European Central Bank (ECB) signals that it may start raising interest rates from July. ECB President Christine Lagarde said in commented recently that, with inflation expectations having changed significantly from pre-pandemic levels, “now is the right time to change variables, including interest rates”.

“It looks like the greenback has peaked, eliminating what’s seen as a headwind for gold,” said Colin Cieszynski, head of market strategy at SIA Wealth Management. Adam Button, Head of Currency Strategy at Forexlive.com, also said that he is bullish on gold as bond yields and the US dollar weaken somewhat.

This week, 17 Wall Street analysts participated in the gold price survey of Kitco News. In which, 11 analysts (65%) forecast gold prices to increase next week. Two analysts (12%) expect the precious metal to fall, while four (23%) expect the market to be flat.

Of the 570 individual investors surveyed, 56% expect gold to rise next week, 29% think the precious metal falls, and 16% hold a neutral view.

The positive outlook for gold comes as the precious metal hits $1,850 per ounce, up 0.5% in the past week.

The precious metal rose last week as data showed US inflation tended to peak. This month’s US CPI increased by 4.9% over the same period last year (in March, it increased by 5.2%).

“Inflation is still going to be an issue, affecting purchasing power and that’s weighing on the economy,” said Bob Haberkorn, chief market strategist at RJO Futures. According to him, the Fed will not be able to completely address the threat of inflation because it will affect the stock market.

This expert believes that any pullback in gold is a buying opportunity in the current context. Gold prices could head towards $2,000 per ounce by year-end as real interest rates remain low.

Sean Lusk, head of hedging at Walsh Trading, also sees inflation as an issue as energy prices continue to rise. He added that, amid growing inflationary threats and recession fears, gold would make an attractive “safe-haven” asset.

Adrian Day, President of Adrian Day Asset Management, is also bullish on gold as the US Federal Reserve (Fed) is hitting the limits of monetary policy. “There’s a battle between confidence in the Fed, the ability of other central banks to tame inflation without triggering a recession, and what’s going on on the other side.”

Minh Son (according to Kitco)