Gold prices (XAUUSD:CUR) may continue to ride lower after swinging from a record high to ending the weekly sharply lower, swayed by shifting market views on the Federal Reserve’s next move for interest rates.
Comex gold (XAUUSD:CUR) fell ~3% for the week as it slipped to $2,335.20/oz on Friday. Gold pulled back after hitting a record high of $2,454.20/oz on Monday.
“It’s hard to say if the price has found a floor yet. It’s been a bad week for the precious metal,” David Morrison, senior market analyst at Trade Nation, said in a note Friday. He said gold (XAUUSD:CUR) during Friday’s session traded at $2,325, a ~5% drop from Monday’s high. The move led to a downturn in the metal’s daily moving average convergence/divergence (MACD) indicator, “suggesting that gold could have further to fall,” Morrison said.
“It certainly wouldn’t be much of a stretch to see [gold] retest $2,300,” Morrison said. “This level, and the area just below, acted as support earlier this month, and it feels as if it wouldn’t take much selling to push it back down there.”
Gold sold off on Thursday after minutes from the Fed’s meeting ended May 1 indicated policymakers would stick with their higher-for-longer stance on interest rates with inflation appearing sticky. Traders then drove up the U.S. dollar (DXY) and Treasury yields (US10Y)(US2Y). Gold (XAUUSD:CUR), which doesn’t offer a yield, was hurt as bond yields rose and a stronger dollar makes gold more expensive for non-dollar currency holders to purchase.
Gold (XAUUSD:CUR) prices were still about 13% higher for the year.
“[Data] from interest rate traders now points to a roughly even split on whether the U.S. Fed will start to cut interest rates in September, with a greater weighting now on November as the start of a loosening of monetary policy,” Frank Watson, market analyst at Kinesis Money, said in a note.
Here are a few gold ETFs:
- SPDR Gold Shares ETF (GLD)
- iShares Gold Trust ETF (IAU)
- DB Gold Short ETN (DGZ)
- GraniteShares Gold Trust ETF (BAR)
- Goldman Sachs Physical Gold ETF (AAAU)