Investors and traders are divided on what direction gold prices will take in the coming week. Some are bullish, while others bearish or neutral. Gold prices look likely to keep moving sideways or remain neutral.
Last Friday EDT prices on the week were up about $22. Optimistic traders who see higher prices said the market could continue its bounce from the $1,350s-an-ounce area, which is where gold prices found support for two days last week. Gold market might be back in a short-term uptrend and prices could touch the $1,500s following lats week’s double-bottom. But this a bullish expectation, at present.
Some traders are wary of the rise past week. Now, it has come the time when markets need to adjust to the eventuality of the US Federal Reserve stopping its QE (quantitative easing) programs. This may happen sooner than expected, according to previous announcements. The Federal Reserve will pull back on its bond-buying program if US economic data consistently improves, even if this happens gradually.
The several other factors that aren’t supporting gold include: a concern over saber-rattling in the Mideast and North Korea, exchange-traded fund outflows and a stronger stock market. Combined, these factors do not suggest that a bull market will develop anytime soon in gold. However, gold may remain bound to a trading range, one with downside bias. At worst, the market might break down towards the $1,000-1,200 on ounce level.
If gold prices remain in a sideways range, it seem gold has formed a bottom with last week’s low. Still, technical-chart action does not show short-term upward trend.
With slow business summer season approaching and big money managers allocating more assets into private equities, it doesn’t look like gold is the investment of choice for many parket participants right now.
