Gold prices will aim higher next week on the back of a renewed market volatility.
Despite that the Comex February gold futures were unable to hold last week’s gains, settling Friday’s session at $1,096.30 an ounce, the yellow metal ended the week with a slight gain of 0.64%.
Silver also posted modest gain of 1% last week, with Comex March silver futures settling Friday’s session at $14.057 an ounce.
Gold futures continue to trade around the $1,100 area despite a positive rebound in equity markets by Friday. Market sentiment among retail investors and market professionals is significantly positive heading into next week.
The Federal Open Market Committee (FOMC) meeting will have the biggest impact on gold in the coming days, with many expecting to see the price to get a boost as the central bank will likely consider the turbulence across markets. Weaker than expected U.S. economic data has caused markets to pare back their expectations for the new rate hike cycle that the Fed embarked on last month with the increase of the interest rates by 25 basis points, the first rate hike in nine years. The Federal Reserve policy should not be that aggressive next week as all other major central banks continue to loosen their monetary policy.
Gold is going to catch up to the realities of geopolitics and all the other problems in the world, as more stimulus will be announced in Western Europe, in China and Japan.
The yellow metal is expected to continue to post gains above $1,100 an ounce as long as the U.S. Dollar Index struggles around the 99 to 100 area. The 100-day and 200-day moving averages should be at $1,107.30 and $1,136.50 an ounce, respectively.
Along with the Federal Reserve, market participants will also be watching outside equity markets to determine gold’s near-term trend. There is a lot of general uneasiness in the marketplace and investors could end up turning to gold as a safe-haven play.
However, while most analysts are bullish on gold in the near-term. Others see the potential for a pullback in prices, especially if there is relative calm in the marketplace. Still, gold could fall to around $1,080 an ounce as it is losing some of the ‘safe-haven’ status; a modest pullback is now in order until the next bout of anxiety in the global markets, and there will be at least one more.
Other economic data due for release next week could add to the market volatility, including U.S. consumer confidence, home sales data, core durable goods orders and the first print of fourth quarter gross domestic product.