The gold market is uncertain overall on likely price moves next week, respondents to the S&P Global Platts Gold Sentiment Survey said Friday, as prices held on to recent gains, recording a second straight week in the black by topping one-month highs in afternoon European trade.
Helped by a weak dollar, which has been under pressure this week following the release of Federal Reserve meeting minutes Tuesday, gold was trading above $1,265/oz in afternoon business Friday, the highest since the end of April and up over 1% on the week.
According to the minutes from the May meeting, Fed officials are willing to wait for more evidence of US economic growth before a further interest rate hike this year, which saw the US Dollar Index falling below 96.95 Thursday, its lowest level since October 2016.
The index recovered to over 97 in early trade Friday, but interest rate expectations and US macro developments are expected to drive gold prices next week and into the medium term.
Respondents to the Platts survey were mixed in their short-term forecast, however. Overall, participants expect prices to remain within the range of $1,240-$1,280/oz next week, but were divided as to the high and lower range.
Last week, respondents correctly predicted prices would remain well bid this week, with forecasts weighed in at $1,240-$1,290/oz.
"After a blistering run in the immediate aftermath of the US Presidential election in November, which saw the trade weighted dollar index rally from 122.8 November 11 to a fresh 15-year high of 129.07 at the end of December, the greenback has cooled somewhat as momentum slows and investor sentiment alone struggles to prop up dollar support," brokerage Sucden told clients earlier this week.
But Sucden noted that even though the dollar has weakened "it remains considerably above the 10-year average of the dollar index at 84.04."
Joni Teves, precious metals analyst at Swiss bank UBS, said Wednesday encouraging factor helping gold's recent strength was the emergence of physical demand.
Platts Gold Premium India assessment has been in positive territory for most of the year, averaging around $0.70/oz, with sources on the ground suggesting solid demand -- although from a low base.
Physical demand has also been reported strong in China this year, with local premiums still close to $10/oz this week. Premiums in Dubai and Turkey both remain unchanged on the week.
