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The gold market has once again transformed into a high-stakes battleground, leaving investors and analysts starkly divided over where the precious metal is headed next. Following a highly volatile trading week, spot gold found itself clinging precariously to the psychological $4,500 per ounce threshold.
In the wake of this turbulence, a fascinating disconnect has emerged in the financial community: institutional experts on Wall Street are increasingly preparing for further price drops, whilst retail investors on Main Street stubbornly refuse to abandon their bullish outlook.
As geopolitical tensions collide with aggressive central bank expectations, the question on every investor’s mind is whether gold can hold its ground or if a deeper correction is on the horizon.
Gold commenced its weekly journey on Sunday evening trading at $4,539.09 per ounce. Despite a brief dip during early Asian trading hours, the yellow metal staged a steady rally through Monday and into Tuesday. This initial surge was largely driven by an influx of safe-haven buying, as global markets reacted to ongoing uncertainty surrounding the conflict in Iran and broader risk sentiment.
However, the momentum ultimately stalled just shy of a major milestone. Gold registered its weekly high at $4,588.64 per ounce before sellers aggressively re-entered the market.
The reversal gathered pace during Tuesday's North American session, triggered by a strengthening US dollar and a sharp repricing of inflation expectations on the back of rising energy costs. The selling pressure intensified into Wednesday, dragging spot gold down to a weekly low of $4,453.00 per ounce, just ahead of the release of the April Federal Open Market Committee (FOMC) minutes.
The FOMC minutes confirmed the market’s underlying fears: Federal Reserve officials remain deeply anxious about persistent inflation risks, specifically pointing towards energy prices and trade tariffs. This hawkish stance effectively capped gold’s ability to mount a sustained recovery. While the metal did push back above $4,500 on Thursday, weaker US consumer sentiment data, rising inflation expectations, and hawkish commentary from Fed Governor Christopher Waller ultimately kept a lid on prices. Spot gold closed out the week under pressure, settled at $4,508.25.
The latest Kitco News Weekly Gold Survey highlights a stark divergence in market sentiment between institutional professionals and retail traders. Out of the Wall Street analysts surveyed, a definitive 62% predicted a price decline in the near term. Only 15% anticipated gains, while the remaining 23% neutral analysts expected a period of consolidation.
Conversely, Main Street retail investors maintained their unwavering bullish bias. In Kitco’s online poll, 56% of retail participants forecast higher prices for the week ahead, 22% expected a decline, and 22% anticipated a sideways trend.
Market experts who foresee a downward trajectory point to a cocktail of macroeconomic and technical headwinds.
Marc Chandler, managing director at Bannockburn Global Forex, noted that whilst gold spent much of the week consolidating above $4,500, it has yet to prove its strength on the upside. According to Chandler, a clear move above $4,600 is required for gold bugs to reassert total control. Without this breakout, he warns that the downside risk could extend toward the 200-day moving average, which currently sits around $4,370. Chandler also raised concerns that a prolonged conflict in the Middle East could prompt further official gold sales from nations like Turkey and Gulf states to support local liquidity.
Rich Checkan, president and COO of Asset Strategies International, echoed this bearish sentiment, highlighting that both the Producer Price Index (PPI) and Consumer Price Index (CPI) recently came in markedly higher, with the PPI hitting multi-year highs.
Checkan noted that interest rate cuts have been off the table for some time, and conversations surrounding interest rate increases are now creeping back into the narrative. Because higher interest rates increase the opportunity cost of holding non-yielding bullion, they naturally exert downward pressure on gold prices. Furthermore, Checkan noted that fragile geopolitical cease-fires are showing signs of deteriorating, which, contrary to historical patterns, has fractured the market's confidence rather than boosting safe-haven demand consistently.
Technical analysis from figures like Alex Kuptsikevich, senior market analyst at FxPro, and Michael Moor, founder of Moor Analytics, also favours the bears. Kuptsikevich noted that while the long-term trend remains structurally bullish, the medium-term trend is undeniably bearish, characterised by a sequence of lower local highs since the price peak at the end of January. He warned of a potential drift back toward the $4,370–$4,400 range, where a massive battle between buyers and sellers is expected to unfold.
Not everyone is convinced that a major crash is imminent. Adrian Day, president of Adrian Day Asset Management, remains in the minority among professionals, predicting a continuation of the recent back-and-forth trading with a slight upward bias.
John Weyer, director of the commercial hedge division at Walsh Trading, provided an important perspective on the scale of recent sell-offs. Weyer pointed out that whilst the nominal dollar drops look dramatic, a $50 dip when gold is trading at $4,500 per ounce is actually incredibly small in percentage terms.
Weyer expects gold to continue fluctuating on both sides of the $4,500 threshold, bound between $4,470 and $4,560. He suggested that the continuing strength in the equity markets is making it difficult for fund managers to justify rotating capital into gold, but any tangible resolution to Middle Eastern geopolitical conflicts could eventually pave the way for steadier economic conditions that stabilise the broader financial landscape.
For many professional traders, the current environment is simply too unpredictable to navigate safely. Kevin Grady, president of Phoenix Futures and Options, revealed that much of the recent market volume has been driven by traders rolling over their positions from the June contract to the August contract, rather than fresh speculative interest.
Grady emphasised that thin futures volumes make it dangerous to enter large positions in either direction. With significant historical support levels sitting down near $4,128 from March, traders are wary of getting caught in a sudden liquidity sweep. Grady advised caution, noting that under the current headline-driven environment, gold is just as likely to surge dramatically higher on unexpected news as it is to drop.
As traders return from the Memorial Day long weekend, a flurry of economic data will likely dictate the next major move for the yellow metal. Market participants will be keeping a very close eye on Tuesday's Conference Board Consumer Confidence survey, especially given recent downside surprises in consumer sentiment.
The weight of the economic data will land on Thursday morning, featuring the release of Preliminary Q1 GDP, Core PCE numbers (the Federal Reserve's preferred inflation metric), weekly jobless claims, Durable Goods Orders, and New Home Sales. If these figures reinforce the narrative of a sticky, inflationary economy, the Federal Reserve's hawkish stance will continue to challenge gold's ambitions.
For readers looking to explore the original market figures and expert opinions in greater depth, please refer to the detailed report on Kitco News:
Disclaimer: This article is provided for informational purposes only, mistakes may be made, and it's not offered or intended to be used as legal, tax, investment, financial, or any other advice.
