(Kitco News ) - Gold could continue to struggle, with prices having room to move lower next week as the market adopts a wait-and-see approach amid shifting investor sentiment in the global marketplace, according to some analysts.
While there is no major panic in the marketplace, analysts are warning investors that gold prices will need to find new support, as the yellow metal is set to end the week below $3,200 an ounce—an important psychological level over the past five weeks. June gold futures last traded at $3,188.80 an ounce, down more than 4.6% from last week.
Gold prices are now down 9% from last month’s all-time high of $3,500 an ounce.
This week’s selloff marks the biggest drop since mid-June 2021 and is slightly steeper than the decline seen in November after President Donald Trump won the presidential election.
In an interview with Kitco News, Thorsten Polleit, Honorary Professor of Economics at the University of Bayreuth and publisher of the Boom & Bust Report, said the selloff is not surprising, as investor sentiment has shifted quickly.
Polleit explained that positive trade talks between China and the U.S., along with deals President Trump has made during his tour of the Middle East, are easing fears that the U.S. economy will fall into a recession.
“An improving economic outlook in the U.S. will continue to hurt gold,” he said. “There is more downside for gold in the near term. But this correction is natural, and gold investors shouldn’t be concerned.”
Polleit added that he wouldn’t be surprised to see gold prices eventually test support below $3,000 an ounce before the correction is over. However, he expects lower prices to attract new investors as broader bullish trends remain intact.
He pointed out that unsustainable global debt levels will continue to support higher inflation and economic uncertainty. Although gold’s safe-haven demand is waning, he said it hasn’t completely disappeared.
Ricardo Evangelista, Senior Analyst at ActivTrades, said in a note Friday that he also sees lower gold prices as broader investor sentiment improves. However, he added that there may be a limit to gold’s downside.
“Weaker-than-expected U.S. economic data has strengthened market expectations of interest rate cuts by the Federal Reserve, pushing the dollar lower and reducing Treasury yields—factors that typically support non-yielding assets like gold. Caught between these opposing forces, gold prices may continue to face headwinds. However, significant losses below current levels appear unlikely, as despite recent optimism surrounding trade and geopolitics, uncertainty remains the dominant theme for market participants,” he said.
In a note Friday, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said he is taking a wait-and-see approach to gold, which is caught in a tug-of-war between two significant forces.
“Despite the recent pullback, several key structural drivers—including central bank buying, geopolitical risks, fiscal debt concerns, and inflation hedging—remain intact. These are likely to underpin prices over the longer term, though a period of consolidation may be required before the next significant upside catalyst emerges,” he said.
When Gold Falls, Another Precious Metal Rises
Although gold is struggling, some analysts say this could be an opportunity for investors to look at silver. This week, silver has managed to hold support above $32 an ounce. June silver last traded at $32.26 an ounce, down 1.5% on the week.
Silver’s relative outperformance compared to gold has pushed the gold-silver ratio back below 100.
Philip Streible, Chief Market Strategist at Blue Line Futures, expects silver to continue outperforming gold in the near term.
“We should continue to see a rotation into silver as recession fears start to ease and investors focus on renewed industrial activity,” he said. “This could be a great opportunity for gold investors to diversify into silver.”
Weekly economic data to watch
Thursday: U.S. weekly jobless claims, S&P global flash PMI, U.S. existing home sales
Friday: U.S. new home sales
