Gold prices next week: Upward prospects remain low.

According to expert forecasts, gold prices next week will continue to be affected by the possibility of the US Federal Reserve (FED) cutting back on its easing policy. In addition, the conflict in Egypt and the sell-off of gold by exchange-traded funds (ETFs) could also impact investor sentiment.


Chart showing the price movement of spot gold in the New York market over the past month - Source: Kitco.

Since mid-June, when FED Chairman Ben Bernanke announced the possibility of scaling back the quantitative easing (QE) program between now and the end of the year, and eventually ending it by the end of next year, gold prices have been under strong downward pressure. Expectations of a QE cut from the FED increased further in Friday's trading session this week when the US Department of Labor released a better-than-expected June jobs report.

Prior to the report, gold prices had been on a sustained recovery trend since the beginning of the week. However, when the US Department of Labor announced that the non-agricultural sector added 195,000 new jobs in June, compared to the expected 165,000, gold prices reversed sharply downwards.

At the COMEX division of the New York Mercantile Exchange (NYMEX), August gold futures closed the week at $1,212.7 per ounce, down $11 per ounce for the week.

According to Kitco News, a website specializing in precious metals, the most important factor for gold investors in the coming period will remain US economic data. This will be the basis for adjusting expectations regarding the Federal Reserve's actions, thereby determining the direction of gold prices.

Early next week, there won't be many US economic statistics released. By Thursday and Friday, notable figures will begin to emerge, including weekly jobless claims, the producer price index, and the consumer confidence report. However, on Wednesday, the market will be receiving the minutes from the Fed's most recent policy meeting.

Sean Lusk, Director of Commercial Speculation at Walsh Trading, believes that the June jobs report could continue to put downward pressure on gold prices early next week. This is because many investors in the US market have been on Independence Day holiday from Thursday through the week. These investors will return to the market on Monday and will be the first to react to the data.

According to Sterling Smith, a commodities futures expert at Citi Institution Client Group, gold prices could have fallen by $60-70/oz on Friday after the jobs report was released. In fact, spot gold in New York closed the session down nearly $30/oz. Therefore, Smith believes gold prices may continue to fall on Monday of next week.

Afshin Nabavi, head of trading at MKS in Switzerland, believes that the US dollar exchange rate and expectations of a potential reduction in the Fed's easing remain the main factors influencing the direction of gold prices next week. However, according to Nabavi, the gold market next week may begin to react to the political crisis in Egypt. In that country, riots are erupting after the military ousted the president and suspended the constitution.

Egypt is not a major oil-producing country in the world, but instability in the country could disrupt oil shipments through the Suez Canal.

“The situation in the Middle East and North Africa, especially in Egypt, is quite tense. This has already been reflected in oil prices. Gold prices are likely to follow oil prices,” Nabavi told Kitco News. This week, the price of light sweet crude oil for August delivery on NYMEX briefly reached $103.25 per barrel, its highest level in over a year.

Furthermore, analysts believe that the gold market next week will continue to closely monitor the gold trading activities of large ETFs, especially the SPDR Gold Trust. The continuous sell-off by these funds since the beginning of the year has put significant downward pressure on gold prices.

Demand for physical gold is another factor that could influence gold prices next week. To date, global demand for physical gold has not picked up. For this reason, TD Securities forecasts that gold prices may remain stuck above the $1,250/oz resistance level, at least in the short term.

“To date, demand for physical gold has not surged following the recent price drop, in contrast to what happened after the April price decline. Trading volume on the Shanghai Gold Exchange has increased, but remains significantly lower than in April… Demand in India is currently sluggish, partly due to seasonal factors,” a report from Barclays bank stated.

According to VnEconomy - TH