(Kitco News) – It was another wild week for precious metals traders and global markets alike as Trump's trade war continued to dominate the price action.
Spot gold kicked off the week trading at $3,338.38, and for the first two days of trading, nothing stood in its way. The yellow metal quickly rose to $3,385 on Sunday evening, and by the North American market open, it was already trading at $3,420 per ounce, albeit on thin Easter Monday volumes.
The Asian market then took the reins, driving spot gold from $3,417 per ounce at 8:00 p.m. EDT all the way to its new all-time high of $3,500 per ounce by 2:00 a.m. on Tuesday, one of the most impressive single-day performances in its multi-year bull run.
But this hitherto unobtainable peak proved unsustainable, as a combination of profit taking and softening rhetoric from the Trump administration started gold's steep descent, which saw it trading back down near $3,410 per ounce by the North American equity open, and as low as $3,318 by 6:00 p.m.
Asian traders managed to push spot gold back up to $3,386 per ounce on Tuesday evening, but a sharp selloff from that level saw the yellow metal slide once again, and half an hour after Wednesday’s North American open, it hit the weekly low of $3,270 per ounce.
Again, Asian traders pushed prices higher, but this time spot gold could only top out at $3,362 per ounce before it settled into a relatively narrow range between $3,320 and $3,365 for the duration of Thursday’s trading.
Early Friday morning saw gold's final sharp sell-off, with the yellow metal falling from $3,323 shortly after midnight Eastern all the way to $3,289 by 2:00 a.m., and down to $3,278 by the North American open.
After one final dip to test the weekly low near $3,270 per ounce, spot gold clawed its way back up to the $3,300 per ounce level to close out the North American session and the week's price action.
The latest Kitco News Weekly Gold Survey showed only a minority of industry experts and retail traders retaining their bullish bias toward gold prices after the yellow metal’s multi-session selloff.
Adrian Day, president of Adrian Day Asset Management, believes the near-term trend is downward, but the factors that pushed gold prices to $3,500 are still in place.
“The possibility of more concessions in the US-China tariff war, as well as increased concerns about a recession, will pressure gold in the near term, so DOWN for next week,” Day said. “But the drivers of gold demand for the past year and more remain, perhaps only a slowing in demand growth, so the pullback may be short and shallow.”
“Up,” said Rich Checkan, president and COO of Asset Strategies International. “The profit-taking runs its course this week, and gold starts inching its way back up again to the recent highs near $3,500 next week. Weakness in the U.S. dollar, uncertainty over geopolitics, tariffs, and the Fed all contribute to put wind in gold’s sails this coming week.”
Kevin Grady, president of Phoenix Futures and Options, was dissecting gold’s recent dramatic moves up and down on Friday.
“The $500 up in gold was lightning-fast,” he said. “You have to watch the volumes, and you have to watch the open interest, because open interest shows new positions coming into the market. When you see massive open interest, you see a lot of margin increases from the exchange, but you didn't see any margin increases. $500 up and all the way down here, no margin increases.”
“I think a lot of speculators came in, they saw the market, ‘Hey, it's going up every morning! I wake up, it's up a hundred bucks. Let me just get a long and start to trade this.’ I think that's why we saw these dramatic downturns,” he said. “When you see gold go up $100 a day, $120 a day, it's not surprising when it goes down $120.”
“I look at the volumes,” Grady added. “I don't think the volumes are very robust. So it says to me that there's not a lot of serious sticky players. At $500 up, I think you saw a lot of weak hands in there trading, and that's why you see these big, dramatic drawdowns.”
Grady now sees $3,000 as key support, even though the market is still well off that level. “I think $3,000 is going to be the main support,” he said. “When the market traded right up to $3,000, it repelled it pretty quickly. Then, when it broke, it just exploded through it. So I'm going to use that as a strong support level. I know that's hundreds of dollars away, but as far as I'm concerned, that is a major support.”
Grady is also looking for confirmation of how the trade war has really impacted gold and Treasuries.
“We'll see some of the data when it starts coming out, but I wouldn't be surprised if we see that China was selling U.S. treasuries and buying gold,” he said. “A lot of people were saying, ‘Oh, I don't think they're going to do that. Why would you sell us treasuries, because you have to buy something else, and what else are you going to buy?’ But at the same time that the Treasury and the bond market was getting hit, you saw gold exploding. The thing is, both of those positions get them away from the United States.”
“That's why I would not be surprised if we find that China was selling U.S. treasures. They know what it’s going to spark, and they know what's going to back Trump off. China's hoping that with a massive sell-off in equities, people are going to be all over Trump and force him to back down.”
“Both of those positions, selling U.S. treasuries and buying gold, moves them away from the US dollar, and it also hurts the U.S. by, spiking our interest rates.”
For next week, Grady expects gold to trade around its current levels until the market gets concrete progress on trade. “I think what's going to happen next week, I think you're going to see at least one trade deal come through,” he said. “That's what the markets are hoping. They're waiting for the first one to come through, whether it's Japan. Whether it's North, I'm sorry, South Korea. Vietnam, India. I think once they see that happening, I think you're going to see a pop in U.S. equities.”
“Gold's kind of trading on its own right now,” he added. “The strong hands are underneath the market. I don't think they're chasing it up like this. They realize the same thing, that it's going up on speculative volume. What you saw even the other day, as the market sells off, there is some support below the market.”
This week, 13 analysts participated in the Kitco News Gold Survey, with a majority of Wall Street now adopting a bearish posture towards the precious metal. Six experts, or 46%, expected to see gold prices rise during the week ahead, while seven analysts, representing the remaining 54%, predicted price declines for the yellow metal. None saw gold holding steady next week.
Meanwhile, 316 votes were cast in Kitco’s online poll, with Main Street also abandoning its long-running bullish bias. 152 retail traders, or 48%, looked for gold prices to rise higher next week, while another 92, or 29%, expected gold to trade lower. The remaining 72 investors, representing 23% of the total, saw prices consolidating during the week ahead.
After a relatively slow week for indicators, U.S. employment data will take center stage next week, with the release of JOLTS job openings on Tuesday, ADP employment data on Wednesday, and weekly jobless claims on Thursday and culminating with April’s nonfarm payrolls report on Friday morning.
Markets will also be paying attention to the Canadian Federal Election on Monday, U.S. Consumer Confidence on Tuesday, U.S. Advance Q1 GDP, Pending Home Sales, and the Bank of Japan’s monetary policy meeting on Wednesday, and the ISM Manufacturing PMI on Thursday.
Darin Newsom, senior market analyst at Barchart.com, sees gold rising once again, even though it’s still too high by every metric.
“Is gold overbought? Yes,” he said. “Is gold vulnerable to a round of selling as long-term investment money moves to other safe-haven markets? Yes. Can gold still find buying interest as April comes to a close? Also yes.”
“The gold market is in no-man’s land at this point, seemingly too high to buy but too strong to sell,” Newsom added. “Unless, as I mentioned, investment money wants and or needs to roll out of gold to another safe-haven market, most notably short-term Treasuries. There is also the interesting situation where the gold/silver spread has gotten one-sided in favor of gold, though silver has shown little interest in fighting back. Maybe at some point this will happen. For now, I’ll stick with gold going up until I see some reason to change on longer-term charts.”
Bob Haberkorn, senior commodities broker at RJO Futures, sees the potential for a much deeper selloff in gold, but expects new buyers and existing holders would just push it right back up again.
“I think gold could pull back to $2,500 and still be on pace to trade higher throughout the rest of the year,” he said. “It would wash a lot of people out, of course, but I think there's a lot of money on the sidelines that would come into this thing.”
Haberkorn said the current pullback is being driven by optimism about possible trade deals. “I think a pullback here, sub-$3,200, we could possibly even go down another hundred dollars before you start seeing some bargain-hunting coming into this market. It did get itself overdone pretty quick on that move to $3,500, and we are seeing it pull back fairly quickly here.”
“If you look at the technical indicators, it has a little further on the downside to go,” he added. “I think realistically, you might see some new buyers coming in down around $3,100. There’s a lot of pent-up demand, and people wanting to add more to positions as well as establish new positions in the gold market.”
Haberkorn said Treasury Secretary Bessent’s comments that the trade war is not sustainable was a good indicator of where things are likely heading with the Trump administration’s China tariffs. “I think they're looking for a way out of this,” he said.
In the near term, Haberkorn thinks gold is likely to bounce around in the current price range while market participants wait on headlines. “But we do ultimately see a move back down at least to $3,200, maybe sub-$3,200 to $3,180 or so. But making a prediction in this environment is tough because the headlines are changing everything. I mean, yesterday, I think I saw four different headlines come out that could have changed what I was thinking five minutes earlier.”
Alex Kuptsikevich, senior market analyst at FxPro, said gold showed significant volatility at its latest top, and downside risks are strengthening.
“Gold's 5% rally in the first 30 hours of the trading week, and touching the important round level of $3500, was followed by a steep fall to $3260 in the next 30 hours,” he noted. “After that, the price stabilised at $3340, close to the highs of the previous week.”
“Signs of a ‘head and shoulders’ pattern are forming on the charts,” Kuptsikevich warned. “In case of a new decline under $3300, we may witness the acceleration of profit-taking. It may be a selloff after a dizzying rally, with the potential to go below $3000, mirroring early April’s growth. The long-term technical picture points to continued overheating and elevated correction potential.”
He also pointed to an alternative medium-term scenario where the recent massive decline may have already cleared the way for a new move higher, but added that “the news on tariffs and geopolitical tensions has enough power to override the entire technical picture.”
Analysts at CPM Group are recommending investors stay long gold and prepare to buy the dips, with potential for $3,440 next week, but they warn that it could be a bumpy ride.
“CPM expects gold prices to remain volatile,” they wrote. “The economic and political issues are not over, those issues that have caused gold prices to rise from less than $3,000 on 9 April to a record above $3,500 two days ago, only to fall $200 and then recover half of that. They remain and are expected to continue to push gold prices higher and lower in extremely volatile fashion.”
And Kitco Senior Analyst Jim Wyckoff sees gold prices trending downward next week. “Steady-lower as gold’s chart posture has deteriorated and trader/investor risk appetite has improved.”
At the time of writing, spot gold last traded at $3,306.18 per ounce for a loss of 1.29% on the day and 0.83% on the week.
