Gold Price To Remain Range Bound Next Week Ahead Of Employment Report – Analysts
San Francisco (May 29) All eyes will be on next week’s May U.S. employment report and the European Central Bank as analysts expect gold to trade at the upper end of its current range.
The gold market ended the week in negative territory for the second consecutive time; however analysts noet that despite a stronger dollar, the yellow metal managed to hold above near-term resistance, creating some optimism in the short-term.
Friday, Comex June gold futures ended the session at, $1,189.40 an ounce, down slightly more than 1% since Monday. A t the same time Comex July silver futures ended the day at $16.701 an ounce, down 2% since the start of the week.
According to the weekly Kitco gold survey, both Wall Street and Main Street are expecting to see higher prices in the near-term; however, the analysts surveyed have a stronger upside bias.
This week, out of 33 market experts contacted, 20 responded; of those, 13 participants, or 65%, see higher prices, three experts, or 15%, see lower prices and four, or 20%, are neutral on the gold market. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
The results of the online survey showed a slightly narrower vote. In total 515 people voted; of those, 230 participants, or 45%, expect to see higher gold prices next week, 186 people, or 37%, expect to see lower prices and 96, or 19%, are neutral.
Although a full week of economic data is expected to create some volatility in the marketplace next week, most analysts are not expecting gold to break above its long-term range. Sean Lusk, director commercial hedging division at Walsh Trading said that gold has the potential to pop higher next week but prices will remain within the $100 range between resistance at $1,230 an ounce and $1,130 an ounce.
“Right now there is a lack of conviction to take gold either way; I don’t think that is going to change,” he said.
Bart Melek, head of commodity strategy at TD Securities, said that although there is a lot of important economic reports to be released next week, unless the data is widely outside of expectations, it won’t change the perception that the Fed will still hike rates in the second half the of year.
“I just don’t think we will see a break out next week,” he said.
He added that because of the looming rate hikes there is a stronger downside bias to gold in the marketplace, meaning that prices will drop lower on positive economic news than it would push higher on negative economic news.
“So long as the data is not horrible the expectations will remain that the Fed will raise interest rates in September,” he said.
The economic calendar next week includes national manufacturing data and personal income and spending data Monday, the European Central Bank Meeting Wednesday, private sector payroll data, ends with one of the most watch reports, nonfarm payrolls data for May.
George Gero, senior vice president at RBC Wealth Management, said that he is slightly bullish on gold next week as the market has already priced in higher interest rates, limiting gold’s downside; however an increase in wage, in Friday’s employment report could be seen as positive for gold because it is considered inflationary.
Ronald-Peter Stoeferle, fund manager at Incrementum AG and author of the In Gold We Trust report, agreed that the wage data in the employment report will be an important indicator for the gold market in the near-term.
Although Stoeferle is bearish on gold prices next week, expecting prices could test $1,160 an ounce, he is bullish in the longer term. All that is needed to push gold higher is a catalyst like rising inflation, he added.