Gold prices had a rollercoaster of a week, experiencing significant losses after hitting all-time highs last week. The market sentiment shifted dramatically as traders and investors reacted to key economic data and statements from Federal Reserve officials.
Last week, gold prices soared to record highs around $2440/oz despite Fed Chair Jerome Powell’s warnings about stubborn inflation and strong US economic data. However, this week, the sentiment changed as traders began to take profits and liquidate positions ahead of the Fed’s potential interest rate decisions.
The release of the Fed’s meeting minutes from May confirmed the central bank’s reluctance to lower rates until inflation shows signs of improvement. Analysts have adjusted their projections, with some now expecting rate cuts to be delayed until late 2024.
This shift in expectations led to a sharp decline in gold prices, with the precious metal sliding to $2350/oz by the end of the week. Gold experienced its first losing week in nearly a month and its worst single week in five months.
As traders look ahead to next week, they wonder if gold prices have reached a new base for trading or if further consolidation is needed. With no major data releases expected, and the Memorial Day holiday in the US, the focus will remain on inflation metrics and the Fed’s stance on interest rates.
Traders are advised to keep a close eye on market developments and prepare for potential volatility as they enjoy their weekend before gearing up for another week of trading.
