Gold and Silver Prices Poised for Consolidation
(Kitco News) – Gold and silver remain in robust uptrends, but investors should prepare to see prices consolidate next week as its recent momentum appears to have peaked, according to some analysts.
Both gold and silver saw renewed volatility on Friday as the precious metals could not hold their significant gains early in the day. At one point, gold prices were up more than 4% on the day, peaking at $2,448.80 an ounce. However, the yellow metal is now looking to end the week close to where it started. June gold futures last traded at $2,355.60 an ounce, up 0.4% from last Friday.
Meanwhile, silver has managed to maintain its outperformance against gold, even as it gives up similar gains Friday afternoon. Silver peaked Friday morning at $29.905 an ounce, an intra-day three-year high. However, as the dust settles, it looks to end the week holding support above $28 an ounce. May silver futures last traded at $28.105 an ounce, up 2% from last week.
Strong Fundamentals Support Gold
Although gold could not hold its ground above $2,400 an ounce, analysts note that it remains relatively strong as it prepares to notch another record weekly close in its belt. The new record comes even as markets start to price out a potential rate cut in June after March inflation came in higher than expected.
The Federal Reserve’s stance on interest rates also plays a crucial role in supporting gold prices. Although markets see a lower chance of a rate cut in June, the overall environment of lower real interest rates continues to be positive for gold.
Analysts Warn of Over-Extension
While gold remains well supported, some analysts have cautioned that the rally may be becoming over-extended.
“I think the momentum is still strong, but at the same time, it is not right to be greedy, and given the stellar rally we have seen in the gold price, we think it is wise to book some profit,” said Naeem Aslam, Chief Investment Officer at Zaye Capital Markets.
Philip Newman, Director and Founding Partner of Metals Focus, also suggested that investors consider taking profits off the table, anticipating a short-term correction after gold’s unprecedented run.
Long-Term Outlook for Gold
Ole Hansen, Head of Commodity Strategy at Saxo Bank, emphasized the broader trends driving gold prices and highlighted the precious metal’s performance against major currencies. While short-term corrections are possible, he remains focused on gold’s long-term potential.
It’s essential to keep an eye on economic data releases, along with central bank speeches, for potential impact on precious metals prices.
Economic Data to Watch Next Week
The upcoming week holds key economic data releases and events that could influence gold and silver prices:
- Monday: U.S. retail sales; New York Federal Reserve Empire State Survey
- Tuesday: US building permits and housing starts; Fed Chair Jerome Powell and BOC Governor Tiff Macklem speak
- Thursday: Weekly jobless claims; Philadelphia Federal Reserve Manufacturing Survey; U.S. existing home sales
Overall, while some consolidation may be on the horizon for gold and silver prices, the longer-term outlook remains positive, driven by factors such as inflation fears and uncertainties in the global economy.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only and is not a solicitation to make any exchange in commodities, securities, or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/or damages arising from the use of this publication.
Insight:
– Despite the potential for short-term consolidation, the long-term outlook for gold and silver prices remains positive due to factors like inflation fears and global economic uncertainties.
– Monitoring economic data releases, central bank announcements, and events can provide valuable insights into the direction of precious metals prices.
