Wall Street trisected on gold's near-term prospects, Main Street bulls in minority as market looks to July payrolls for direction

Gold prices saw another choppy week, as dip-buying and softer inflation data helped the precious metal defend the $4,000 level, while the Federal Reserve’s hawkish hold, rising Treasury yields, and renewed oil-driven inflation concerns capped the rebound. Spot gold kicked off the week trading at $4,051.51 per ounce on Sunday evening, and pushed higher through Monday as traders continued to buy weakness near the lower end of gold’s recent range. The move stalled Tuesday as markets turned cautious ahead of the Federal Reserve’s rate decision, with elevated oil prices and persistent inflation concerns keeping yields supported. Gold broke below $4,050 on Wednesday morning and briefly lost the $4,000 support level, with spot prices ultimately setting their weekly low at $3,995.90 per ounce. The yellow metal recovered before the Fed held rates steady at 3.50% to 3.75%, but three dissentions in favor of a hike gave little reassurance that policy easing was coming, with buyers stepping back in as traders digested the Fed’s latest message and positioned for upcoming inflation data. The strongest rebound came Thursday after softer PCE inflation helped cool some of the market’s rate-hike concerns, pushing gold back above $4,100. Spot gold ultimately set its weekly high at $4,119.82 per ounce at midday Thursday, but the rally faded Friday after the Employment Cost Index came in slightly hotter than expected, lifting Treasury yields and pressuring the metal into the close. After failing to hold above $4,100, spot gold was last trading at $4,048.40 per ounce Friday afternoon, leaving the metal nearly flat but slightly lower on the week. The latest Kitco News Weekly Gold Survey showed Wall Street evenly divided between bulls, bears, and the fence, while Main Street sentiment slid out of bullish territory after another failed breakout. “Unchanged,” said Adrian Day, president of Adrian Day Asset Management. “There needs to be more back and forth in the price until markets have come to a conclusion on the outlook for monetary tightening ahead. The market also needs clarity on the conflict in the Middle East; when that ends, the dollar will lose its safe-haven premium, and that will also be positive for gold. For now, though, the market needs clarity before moving convincingly higher.” “Sideways,” said Darin Newsom, senior market analyst at Barchart.com. “Nothing has changed with the gold market. And that’s what makes its continued sideways trend more interesting. Investors continue to hop around from sector to sector, looking for the next volatile spike rally or selloff, while central banks around the world continue to buy gold. Of the two, the latter is the better indicator of the economic trouble always lurking just under the surface. And we know where the epicenter of that trouble is.” “For now, I’m expecting the December futures contract to yo-yo back and forth across $4,129.50 on its daily close only chart, the midpoint between the low daily close of $4,048.70 (July 16) and $4,210.30 (July 22),” Newsom said. “Up,” said James Stanley, senior market strategist at Forex.com. “The 4k level still doesn’t look like it wants to give way in spot gold. The run in yields is pretty much the negative scenario, but despite that, buyers have still held the line at 4k, so I’m going to stick with my long-term bias until logic dictates a shift.” “I am neutral on Gold for the coming week,” said Colin Cieszynski, chief market strategist at SIA Wealth Management. “It appears to still be consolidating around $4,000.” “Unchanged,” said Rich Checkan, president and COO of Asset Strategies International. “The Federal Open Market Committee (FOMC) left U.S. Interest rates unchanged. Gross Domestic Product (GDP) growth slowed. Personal Consumption Expenditure (PCE) index moderated slightly. The conflict in Iran is spreading to new fronts. As a result of all of this and a slightly stronger U.S. dollar, I don’t see gold moving sustainably higher just yet...