This week brought dramatic movements to the gold market as it responded to significant economic data and Federal Reserve statements. Starting the week around $2,024 per ounce, gold steadily climbed before the FOMC statement and Powell’s press conference led to a sharp decline. Subsequently, gold reversed course, reaching a weekly high of $2,064.28 on Thursday. However, Friday’s robust jobs report, nearly doubling consensus expectations, pushed gold down to $2,030 per ounce.
The latest Survey revealed a divergence between institutional and retail traders. While two-thirds of experts turned bearish, most retail investors maintained a bullish outlook for the coming week. The disagreement stems from the Fed‘s stance, economic data, and geopolitical factors influencing market sentiment.
Analysts like Frank McGhee and Naeem Aslam anticipate further downside risks for gold, citing the strong U.S. labor market and the Fed’s reluctance to cut rates in March. They view the recent correction as a reality check for bullish speculators, with the dollar index gaining strength.
James Stanley, who shifted from a bull to a bear, emphasizes that the failure to breach resistance levels and the absence of a March rate cut could motivate bears. Other analysts, such as Mark Leibovit, expect a near-term correction below $2,000 before a potential rebound.
The gold market has effectively priced in the current rate path but anticipates a range-bound scenario. External events or changes in Fed speak could influence gold’s movement. The threat of a regional banking crisis remains a concern, providing support for gold prices.
While Wall Street sentiment appears bearish for the near term, retail investors on Main Street are more optimistic, with a slim majority expecting gold to rise. The Middle East’s geopolitical situation will likely be a major focus for the gold market next week.
Analysts caution that gold’s response to the Fed’s stance, economic data, and geopolitical events will continue to drive market dynamics. The potential for external events or a change in economic data could lead to a breakout from the current range. Gold’s sensitivity to geopolitical strife and the threat of a regional banking crisis remains a key factor influencing its price.
