90% of experts in Kitco's survey bet that gold prices will go up next week, as the possibility of the Fed keeping interest rates unchanged increases.
This week, world gold prices experienced many strong fluctuations. Precious metal prices at times rose to more than 4,400 USD - the highest in 10 weeks thanks to technical buying pressure. The market then fell sharply due to profit-taking activities of investors. By the end of the week, gold recovered when US retail sales unexpectedly fell, reinforcing expectations that the Fed would keep interest rates unchanged in September.
Next week's outlook tilts strongly toward an uptrend. Kitco News' survey of bankers, analysts and professional investors showed that 90% forecast an increase in gold prices. Only 10% expect a decrease and no one thinks the price will move sideways.
The bullish forecast group mainly bets on the possibility that the Fed will not raise interest rates and the USD is under a lot of pressure. Rich Checkan, President and COO of Asset Strategies International, said that the US consumer price index and manufacturing index are both cooling, in the context of a weak labor market. These factors "lead investors to believe that the Fed will not raise interest rates at its September meeting," Checkan said. He affirmed that "the trend is clearly tilted towards the upside".
Marc Chandler - CEO of Bannockburn Global Forex also predicted that gold prices could go up. He said he was waiting for the precious metal to "surpass the 200-day moving average, around the $4,503 mark per ounce."
Alex Kuptsikevich, senior market analyst at FxPro, said that the return of buying power at the weekend shows that profit-taking activities are only short-term. However, for gold to stay above the $4,500 mark, the market needs "a reliable fundamental signal", such as the USD continuing to weaken and the prospect of looser monetary policy.
Adam Button - Director of currency strategy at InvestingLive sees gold's motivation coming from economic data, pressure on the USD, the US budget deficit and concerns in the bond market. In the short term, Button assessed: "If gold can hold above 4,300 USD, we can feel quite secure."
On the contrary, Darin Newsom - senior market analyst at Barchart.com, is the only expert who forecasts a decrease in prices. He said currently, no fundamental factors have changed. As for the long term, Newsom admitted that the US budget deficit continues to reduce confidence in the USD and support demand for gold.
However, he believes that gold prices are about to enter a short-term technical downtrend. "If so, the market could see a sell-off next week," Newsom said.
Daniel Pavilonis, senior commodity broker at StoneX Group, said that although gold has increased in the past two weeks, the precious metal is still mainly fluctuating in a narrow range. "We need some momentum, and right now we don't have it," Pavilonis said. He believes that escalating geopolitical tensions, or fears of uncontrolled inflation and currency devaluation, could become strong enough catalysts.
The focus of the market next week is the minutes of the July policy meeting to be announced by the Fed. This document helps investors get more signals about the Fed's views on inflation, growth and interest rate roadmap. The US will also release data on manufacturing, construction, home sales and unemployment claims.
