World gold price may decrease next week

Precious metal prices have fallen for two consecutive weeks and are expected to continue falling next week, as the US is unlikely to cut interest rates soon.

At the close of trading on February 16, the world spot gold price increased by nearly 10 USD to 2,013 USD per ounce. However, the precious metal still recorded its second consecutive weekly decline, mainly due to higher-than-expected US inflation figures in January, reducing the possibility of the US Federal Reserve (Fed) cutting interest rates soon.

The latest Kitco News survey of analysts, bankers and gold traders shows that the downtrend could continue into next week. 57% of respondents expect prices to fall, 21% expect prices to rise and 21% say the price trend is unpredictable.

Adam Button, head of currency strategy at Forexlive.com, is bearish. "I think the inflation numbers are just a cyclical thing. But it will take months for the market to realize that. It's very difficult to stop the rise in the dollar and US government bond yields at the moment," he said. Gold typically moves inversely to the US dollar and interest rates.

World spot gold price developments this week. Photo: Kitco — World spot gold price developments this week. Photo: *Kitco*

Marc Chandler, director of Bannockburn Global Forex, agrees. "US inflation in January was stronger than expected. This will push the USD and US bond yields higher. For me, the USD and interest rates have the biggest impact on gold," he said. Chandler believes that gold prices will return to $1,950-1,965 next week.

Jim Wyckoff, senior market analyst at Kitco News, also said that the short-term trend of the precious metal is down. And with the Fed unlikely to cut interest rates in March, gold prices will have a hard time breaking above $2,000, Everett Millman, market analyst at Gainesville Coins, told Reuters.

Mark Leibovit, editor-in-chief of VR Metals/Resource Letter, expects prices to rise after the correction, explaining that the US is still facing many economic and political challenges at home.

"Is the US going to default? Is the banking crisis just being held back because of the upcoming presidential election? The stock market is still facing the risk of a decline in the first half of this year. Next week, gold prices will rise," he said.

Adrian Day - Director of Adrian Day Asset Management, said that gold prices will not have a clear trend next week. "Gold prices will continue to fluctuate according to economic reports, until the Fed actually cuts interest rates. And we are not there yet," he said.

There are few economic reports coming to the US next week, apart from jobless claims and Fed officials’ remarks. Another important data point will be the minutes from last month’s Fed meeting.

The US market will be closed for the holiday on February 19. However, the Chinese market will reopen after the Lunar New Year holiday.

Ole Hansen, head of commodity strategy at Saxo Bank, said he would be closely watching Chinese investors next week, as the world's top gold consumer. "Prices are unlikely to rise in the short term, as the likelihood of the Fed cutting rates soon is decreasing. I will see next week how Chinese investors react to the price decline," he said.

Ha Thu (according to Kitco, Reuters)