Wall Street sees gold prices challenging $2,500 next week, Main Street sentiment is more restrained

According to a survey, Wall Street anticipates gold prices could challenge $2,500 next week, while Main Street sentiment is more restrained. This week, the gold market faced significant economic data and in-depth Fed commentary, leading to one of the most dramatic moves for precious metals this year.

Spot gold began the week trading at $2,361.17, remaining steady through Sunday and Monday as it awaited vital inflation data. Tuesday morning brought a mixed Producer Price Index (PPI) report, but markets found reassurance in comments from Fed Chair Jerome Powell, who told the Foreign Bankers’ Association that he was confident the central bank would not need to hike rates again. This led gold prices to turn positive early Wednesday morning. The April Consumer Price Index (CPI) report, showing month-over-month improvement, further encouraged traders to push gold prices higher.

Wednesday evening saw a triple top at the $2,400 level, stalling momentum temporarily. Gold prices trended downward through Thursday but rebounded strongly by Friday morning. When gold prices decisively broke through $2,400 per ounce around 10:00 am EDT, they continued to rise. Colin Cieszynski, Chief Market Strategist at SIA Wealth Management, expressed his bullish outlook for gold, noting the US dollar’s retreat and lower treasury yields. He suggested that breaking the $2,400 resistance could open the door to a potential run at the $2,500 level.

James Stanley, senior market strategist at Forex.com, also expects gold to climb further soon. He noted the strong performance throughout the week, particularly on Friday, indicating acceptance above the $2,400 level. He believes this keeps the door open for a possible run up to $2,500.

Adrian Day, President of Adrian Day Asset Management, is more cautious. He expects gold to have trouble holding Friday’s highs. He anticipates another attempt to cross $2,400, followed by a small retreat. However, he acknowledges gold’s impressive resilience and predicts it will eventually reach that level.

Adam Button, head of currency strategy at Forexlive.com, highlighted the significant presence of dip buyers and the growing buzz around gold. He pointed out signs of a slowing US economy, which could bring rate cuts forward. Button emphasized that this recent rally is part of a broader uptrend driven by increased demand from China, Turkey, and much of the Middle East. He also noted the bullish implications of the meeting between Russian President Vladimir Putin and Chinese Premier Xi Jinping.

This week, a survey of Wall Street analysts showed bullish solid sentiment, with 79% expecting gold prices to climb higher next week. Only 14% predicted a decline, while 7% saw steady prices. Meanwhile, a separate poll of Main Street investors revealed more moderate optimism. Of the respondents, 58% anticipated higher gold prices, 21% expected a decline, and another 21% predicted rangebound movement.

Next week’s economic calendar is relatively light, giving markets a break after this week’s inflation data drama. Key events include releasing US existing home sales for April and the FOMC minutes from the April/May monetary policy meeting. Additionally, the S&P Flash Manufacturing and Service Sector PMIs, weekly jobless claims, and April new home sales will be released on Thursday, followed by the April durable goods report on Friday.

Marc Chandler, Managing Director at Bannockburn Global Forex, believes gold prices might be slightly overextended after this week’s breakout. He noted that momentum indicators suggest gold could challenge the intraday high from April 12 near $2,431.50. However, he cautioned that gold is trading above the Bollinger Band, indicating a possible pullback.

Darin Newsom, Senior Market Analyst at Barchart.com, also sees potential for gold to give back some recent gains. He observed that daily stochastics indicate the market is overbought and that a reversal pattern might signal a change in trend.

Sean Lusk, co-director of commercial hedging at Walsh Trading, observed the broader commodity complex catching fire on Friday, with precious metals leading the way. He attributed this to high inflation, massive debt issuance, and central bank currency printing pushing market participants into precious metals and other commodities.

Michael Moor, Founder of Moor Analytics, predicted that gold prices are likely to rise further, potentially reaching $2,448.8. He cited recent exhaustion levels and market strength as indicators of continued bullish momentum.

In summary, the gold market is poised for significant movement, with many analysts expecting prices to challenge the $2,500 level in the near term. Despite some caution, the overall sentiment remains positive, driven by economic data, central bank policies, and geopolitical developments. Investors should watch closely as gold continues to navigate this dynamic landscape.

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