Wall Street goes full bull on gold, Main Street reclaims bullish bias as gold holds above $3,300/oz
By Ernest Hoffman
Wall Street goes full bull on gold, Main Street reclaims bullish bias as gold holds above $3,300/oz (Kitco News) – Reports of the trade war truce appear to have been greatly exaggerated, and the resumption of economic hostilities this week helped to propel gold through a series of strong sessions as it broke back above $3,300 per ounce.
Spot gold kicked off the week trading at $3,217.90 and quickly rose above $3,240 per ounce early Sunday evening before pulling back to retest $3,210 shortly after midnight.
The European session saw gold top out at $3,246 once again, and with little to propel the price action, it traded sideways in a narrow $15 range through Monday’s trading.
Tuesday morning was the real start to the week for gold, with North American traders propelling it decisively through the $3,246 ceiling moments after the open, and the yellow metal ultimately topped out just $5 short of $3,300 per ounce by the North American close.
Then it was Asia's turn to take the reins, and they promptly pushed gold through $3,300 per ounce, and right up to resistance at $3320.
After a retest of support at $3,300 held shortly after 8:00 a.m. EDT, gold prices spent Wednesday setting a series of higher highs and higher lows as part of a slow and steady uptrend, before Asian traders once again spiked it to a fresh weekly high of $3,343 per ounce overnight.
But following a double-top in the mid-$3,340s, gold saw its sharpest slide of the week as it sold off all the way down to $3,290 per ounce by 6:45 a.m. EDT Thursday morning.
But after another bounce off this level 15 minutes after the North American open, gold entered a steady uptrend which would last through the duration of Thursday’s and Friday's trading sessions, and which would see the yellow metal set a weekly high of $3,366 per ounce on Friday afternoon.
The latest Kitco News Weekly Gold Survey showed industry experts bereft of bears for next week, while retail traders reclaimed their bullish bias after the yellow metal’s strong showing.
“Higher,” said Rich Checkan, president and COO of Asset Strategies International.
“Gold consolidated and is now ready to move higher again.
That move should be aided by the downgrading of U.S. treasuries from Aaa to Aa1 by Moody’s as well as what appears to be the imminent passage of the Big Beautiful Bill… which is loaded with deficit spending.”
“Whenever I see gold and silver surge before a long weekend, it suggests the bias is upward,” Checkan added.
“Consequently, the reverse is true as well. Investors are making it clear they want to be in the market before the thin holiday trading on Monday where moves can be exaggerated.”
Colin Cieszynski, chief market strategist at SIA Wealth Management, thinks renewed trade war tensions will be good for gold prices.
“With Trump talking tough on tariffs once again, I am bullish on Gold for the coming weeks,” he said.
“Up,” said James Stanley, senior market strategist at Forex.com.
“I’m sticking with my bullish bias.
There’s a few hours ahead of the close as I write this, and gold is showing a $3,350 break which has held the highs for the past six weeks.
I still have no concrete evidence that the bullish trend is finished here, so until that happens, I’m going to default to the trend.”
“I think $3,500 is a major level given the touch-and-go in spot,” he added, “and that’s the price that bulls need to beat before we can begin to entertain a run at 4k.”
Adam Button, head of currency strategy at Forexlive.com, sees gold prices continuing to move higher because the markets have embraced bullion as the asset of choice for bad tariff news.
“The trade war is back on, and gold is the trade war trade,” he said.
“I think the gold bulls have to be emboldened, now that you know the playbook.
In the first round of the trade war, gold was sold initially on a rout on risk assets, and now we're not getting that.
It wasn't the same kind of rout on risk assets, but I think there's some muscle memory developing in buying gold on a trade war, and also on selling the U.S. dollar.
Even though we saw today there was a knee-jerk to buy the dollar on a few fronts, it quickly unwound.”
“Trade wars aren't something the market has a great deal of experience with,” Button conceded.
“But the playbook is becoming more and more clear, that when the trade war worsens, you sell the dollar, you buy gold, buy JPY, buy CHF.
You buy gold.
And I think as that gets further ingrained, it results in more aggressive trading, higher leverage, higher conviction, and ultimately higher gold prices.”
“Gold is morphing into the go-to trade war asset,” he added.
“When the going gets tough in the trade war, buy gold.
If you think the trade war's worsening, buy gold.
If you think it's getting better, take some off the table.”
Button also said he wasn’t surprised to see Bitcoin moving straight down while gold was moving straight up earlier on Friday morning.
“It's not the strong hands buying Bitcoin,” he said.
“You can lose a lot, and it's leveraged, whereas I think gold trades tend to be less leveraged, which gives them a little bit more of a stomach.
If you have a falling dollar and rising stocks, Bitcoin probably does better.
If you have a falling dollar, falling stocks, gold can do better.”
This week, 16 analysts participated in the Kitco News Gold Survey, with Wall Street abandoning all bearish attitudes following a week of renewed price strength.
13 experts, or 81%, expected to see gold prices rise during the week ahead, while the other three analysts, or 19%, saw gold trading sideways next week.
None predicted price declines for the yellow metal.
Meanwhile, 245 votes were cast in Kitco’s online poll, with Main Street returning to a solid majority holding bullish sentiment after gold’s recent gains.
155 retail traders, or 63%, looked for gold prices to rise further next week, while 52, or 21%, expected gold to trade lower.
The remaining 38 investors, representing 16% of the total, saw prices consolidating during the week ahead.
Next week is a shortened one owing to the Memorial Day holiday on Monday, but traders will still have plenty to keep them busy upon their return.
Tuesday will see the release of durable goods orders for April and Consumer Confidence for May, along with the Reserve Bank of New Zealand’s monetary policy decision later in the evening.
Then Wednesday afternoon, markets will receive the minutes from the May FOMC meeting, with investors looking for signs that the Fed may be softening its stance on rate cuts.
Thursday will see weekly jobless claims, U.S. Preliminary Q1 GDP, Pending Home Sales data, and the week ends Friday with the release of Core PCE, the Federal Reserve’s preferred inflation metric.
Marc Chandler, managing director at Bannockburn Global Forex, said gold looks poised to challenge $3400 once again.
“The downside correction from April 22 high looks over,” he said.
“Spot prices reached the trendline drawn off the April and May highs.
The momentum indicators are constructive, and the Dollar Index snapped a four-week advance, which also looks corrective in nature.
It looks like a three-way correction in gold was completed and a move to new highs in the medium term looks reasonable.”
“Up,” said Alex Kuptsikevich, senior market analyst at FxPro.
“At the end of last week, gold managed to stay above the 50-day moving average, which was a local victory for the bulls.
The global victory was Trump's return to pro-tariff rhetoric.
This included attacks on Apple and his intention to raise tariffs on EU imports by up to 50%.”
“The market's reflex reaction to such events is to flee into gold,” Kuptsikevich said.
“This is all the more true given the growing nervousness around US debt securities, which were preceded by a downgrade of the top credit rating from Moody's.”
“Overall, the gold market looks overheated and is expected to struggle to make further highs in the coming weeks,” he warned.
“Nevertheless, next week it is quite logical to expect a new attempt by Gold Bugs to fix the price above $3400 or even slip to $3500.”
Daniel Pavilonis, senior commodities broker at RJO Futures, was looking over the charts of gold’s recent performance on Friday morning.
He said the yellow metal is at an inflection point right now.
“I had this trend line drawn from the high on April 21, which is the $3,509, and then to the May 5 high.
And that's where we're at right now.
So we rallied back up to that upper bound trend line.”
“The question is, are we going to roll over from here, or are we going to keep on going?”
“I think if we start closing above this trend line over the next couple of trading sessions, the next level up is at $3,455 and then we get back up to $3,509,” Pavilonis said.
“If we break above $3,509, I think we have a pretty quick shot to get up towards $3,800.”
Pavilonis said the 90-day pause is flying by, and despite the assurances that trade deals are coming, there’s been no significant trade deals.
“With the 50% [tariff threat] today with the EU, 25% with Apple producing phones outside of the U.S., it’s just a flight to quality into gold.”
He said the people he’s talking to are holding off on doing any business.
“On my end, on the futures side and hedging with commodities, we work with a lot of clients in anything from manufacturing to building to making other investments in the U.S., or outside of the U.S… everything seems to be at a standstill,” he said.
“And once things start to look like they're approachable again, we see these big moves in the 10-year yield, which makes things a little bit difficult for investments, fluctuations in currencies… ‘Do we unload inventory?
Do we hold it?
Hopefully there's no tariffs.
Do they come to an agreement?’”
“There's just so much uncertainty in the market, and I think that's one of the things that is driving gold right now,” he said.
“I think we're at a very crucial area of resistance here that could potentially turn this thing into the next wave much higher.
If we could break up through this trend line, if we start closing above $3,365ish, we're pretty much right there, but we start closing above these levels, I think you might start to see a second real trendy leg to the upside.”
Looking ahead at next week’s major data release, Pavilonis said he doesn't think PCE is going to be as important as it has been in the past.
“I don't see it coming out really like an inflationary number,” he said.
“I don't think it's going to, be a blowout one way or another, or a surprise.
But I do think that the ongoing trade talks with really no significant deal coming about, and as we get into the middle of the 90 days and nothing significant happening, then I think there's going to be some problems on the horizon.”
Up,” said Michael Moor, founder of Moor Analytics.
“In a Higher time frame, we are still in an overall bull trend from August of 2018, and likely in the later stages.
Part of this is a prediction I made of $151 minimum, $954 (+) maximum from $2,148.4 – of which we have attained $1,361.5 FULFILLING THE MAXIMUM!
This is OFF HOLD.”
“On a Lower time frame, the break above 31482 warned of strength for days—we rallied $198.6.” he said.
“The trade above 32214 (-11 tics per/hour) projects this upward $100 (+)—we have rallied $125.4.
The trade above 32392 projects this up $35 minimum, $115 (+) maximum—we attained 126.5.
If we break above 33466, this will warn we may be in the last stretch from 31233, with possible exhaustion at 33632-54, 33787-894, 34159, and higher.
Decent trade below 33182 (+12 tics per/hour starting at 10:20am) will project this downward $50 minimum, $110 (+) maximum.”
And Kitco Senior Analyst Jim Wyckoff sees gold prices moving higher once again after weeks of consolidation.
“Steady-higher on continuing safe-haven demand.”
At the time of writing, spot gold last traded at $3,360.74 per ounce for a gain of 1.99% on the day and 4.50% on the week.
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