Gold To Remain Volatile Ahead Of Employment Data Next Week – Analysts

 

(Kitco News) - The gold market is expected to see another volatile week as investors and traders prepare for April’s employment report Friday.

 

Despite starting the week on a strong positive note, gold prices ended in negative territory for the fourth straight week. Friday, Comex June gold futures settled the session at $1,174.50 an ounce, down 0.41% on the week.

 

Silver prices ended their four-week losing streak Friday. Comex May silver futures settled the session at $16.111 an ounce, up more than 2% on the week.

 

Looking ahead, Wall Street and Main Street have opposing views on the gold market next week. According to Kitco’s online survey, of the 351 people who voted, 170 participants, or 48%, expect to see higher gold prices next week, 117 people, or 33%, expect to see lower prices and 64, or 18%, are neutral.

 

At the same time, out of 33 market experts contacted, 19 responded; of those, 9 participants, or 47%, see lower prices, 6 experts, or 32%, see higher prices and 4, or 21%, are neutral on the gold market.

 

Nic Brown, head of commodity research at Natixis, said low liquidity in the marketplace will make it difficult to predict where gold prices are going in the short-term. He added the lack of participation in the gold market means that doesn’t take much to push prices, triggering both buy and sell stops.

 

However, in the short-term, the French-based bank does see some potential and markets start to re-adjust their expectations for the Federal Reserve’s first rate hike. The bank see’s to average about $1,200 an ounce in the second quarter and average 1,160 for the year.

 

“This isn’t a really big adjustment as we still expect to see lower prices for the year,” said Brown.

 

Howard Wen, commodity analyst from HSBC, agreed that volatility will be an important factor for the gold market next week. He added that he will continue to watch outside markets like equities and the U.S. dollar to determine gold’s short-term trend.

 

Of course the biggest risk to the marketplace will come at the end of the week with Friday’s employment report. He said currently,

 

HSBC is expecting the U.S. economy to have created 210,000 jobs in April. Consensus estimates put the employment growth at 235,000 jobs.

 

“We are expecting gold prices to remain near the bottom end of their current range and if employment comes in above 200,000 we could see prices fall below current support,” he said.

 

Adrian Day, president of Adrian Day Asset Management, said that he sees potential for the gold market next week as the latest selloff is overdone.

 

“The Federal Reserve’s mid-week statement was clearly gold-bullish,” he said. “We have seen this before, however, where the market sells off after a Fed statement, but recovers as the market realizes that the Fed won’t tighten any time soon.”

 

Although the biggest data report will come at the end of the week, ahead of the employment report, markets will receive ISM non manufacturing data on Tuesday and private company employment data from ADP Wednesday.

 

Some analysts are also warning that Britain’s federal elections on May 7 could have an impact on gold markets is the results show a majority for Conservatives, who have said that if they win they will hold an referendum on its membership to the European Union by 2017.

 

Anaslysts have noted that a Britain’s exit from the EU could pose a threat to the euro, which would create safe-haven demand for gold prices. Currently polls show a close race between Britain’s federal parties.

 

Courtesy: Kitco News