Gold is largely expected to move lower next week, respondents to the S&P Global Platts Gold Sentiment Survey said Friday, as recent price momentum stalled at the end of a week that started with prices reaching a new five-month high.
Following the increase in tensions during the long Easter weekend over North Korean nuclear tests, as well as Turkey's referendum result that will increase President Recep Tayyip Erdogan's executive powers, gold rallied to just below $1,295/oz Monday, its highest since the election of Donald Trump to the White House at the start of November.
It has since fallen back to around $1,280/oz Friday, which marks the first weekly decline for three weeks, of around $5/oz.
The surprise announcement by UK Prime Minister Theresa May of an early general election Tuesday and its ratification Wednesday by the UK parliament did little to boost prices ahead of the first round in a closely contested French presidential election Sunday.
Overall, respondents to the survey are expecting safe haven gold demand to fall away next week as geopolitical tensions ease, but upside risk to the price following a strong showing from the right-wing, anti-EU French presidential candidate Marine Le Pen remains.
"If the anti-establishment candidates already do significantly better on Sunday, this could trigger marked price fluctuations at the start of next week -- in which case gold would presumably be in considerable demand as a safe haven," Commerzbank said in a note Friday.
On average, participants are expecting gold prices to fall back to a range of $1,265-$1,295/oz next week. Last week they correctly forecast prices higher, but did not foresee the slide at the end of the week.
Physical demand has been more subdued this week on higher prices once again, but surprisingly robust, according to local sources.
Discounts have been reported at around $1-2/oz in India this week, although a number of gold dealers have reported moderate sales.
Premiums in China have been reported again at $8-$10/oz this week, unchanged.
Small discounts were reported this week in Dubai of around 50 cents/oz, while Turkey was at a $0.50-$1.0/oz premium, both unchanged.
