(Kitco News) – Despite robust U.S. labor market data impacting gold prices negatively, turmoil in the U.S. banking sector may continue providing solid support for the precious metal. While April gold futures dropped about $20 on Friday due to the U.S. Bureau of Labor Statistics reporting a creation of 353,000 jobs in January, beating expectations, wages also increased by 0.6%, contributing to the ongoing inflation threat in the economy. Consequently, gold prices fell as the market’s anticipation of a Fed rate cut next month dipped to less than 20%.
However, experts believe that gold prices have managed to maintain vital support levels and are closing the week in positive territory despite the selloff. April gold futures were last seen trading at $2,052.70 an ounce, up nearly 1% from the previous Friday’s close. Some analysts view this week’s gold price action as reason enough to be bullish and look for buying opportunities.
Conversely, not all analysts are optimistic about gold’s potential. Adam Button, chief currency strategist at Forexlive.com, is neutral on the market and expects lower prices in the near term as seasonal factors fade. Traditionally, January is a strong month for gold, with average gains of 1.79%. This year, however, gold prices experienced a 0.2% decline for the month.
Ole Hansen, head of commodity strategy at Saxo Bank, maintains a long-term bullish outlook on gold, despite the recent events. He anticipates further consolidation in the marketplace, indicating that gold and silver may remain stagnant in the short term until there is more clarity on the timing, pace, and depth of future U.S. and EU rate cuts.
While experts remain cautious about gold in the immediate future, there is not a significant bearish sentiment. Some analysts believe that negative banking headlines could quickly push gold prices higher. This past week, regional U.S. bank New York Community Bancorp saw a substantial selloff after reporting a loss of $252 million in the fourth quarter of 2023, largely attributable to extensive weakness in commercial real estate.
Looking ahead, markets could be sensitive to comments from Federal Reserve Chairman Jerome Powell as he appears for an interview on CBS News’s 60 Minutes on Sunday. The only major data point to be released next week will be the ISM service sector PMI.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is purely for informational purposes and not a solicitation to make any exchange in commodities, securities, or other financial instruments. Kitco Metals Inc. and the author do not accept responsibility for losses and/or damages arising from the use of this publication.
