Gold prices next week: Focus on U.S. inflation

This week, gold prices rose from 3,204 USD/oz to 3,365.8 USD/oz, closing the week at 3,356 USD/oz. In the Vietnamese gold market, the price of SJC gold bars also increased from 119.3 million VND per tael to 121.5 million VND per tael. Gold prices increased this week, because:

First, the uncertainty actually began late last Friday after the rating agency Moody’s downgraded U.S. debt.

Second, gold prices also saw renewed safe-haven demand midweek after the U.S. Treasury held a disappointing 20-year bond auction, which had a domino effect, steepening the long end of the yield curve as 30-year yields rose above 5%.

Third, President Donald Trump threatened to raise tariffs on European imports to 50% by June 1. This caused investors concern about the reheating of the trade war.

“Tariff threats from [Trump] were a stark reminder that this trade war is far from over, and the U.S. will suffer the economic consequences, which I see as gold positive,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said.

Fourth, the lack of progress in negotiations between Ukraine and Russia, as well as increasing concerns about a larger conflict in the Middle East due to Israel's intensified airstrikes on Gaza and plans to attack nuclear facilities in Iran, have also heightened gold's role as a safe haven.

In the current situation, experts are paying attention to the movements of the USD because this currency has been continuously declining. If the USD continues to depreciate, it could positively impact gold prices next week. However, David Morrison, senior market analyst at Trade Nation, said in a note that a weak dollar will continue to benefit gold; however, he urged investors to exercise caution as momentum is currently neutral and price action could go either way, meaning gold prices may go sideways while waiting for the results of the US-China trade negotiations, US economic data, and whether Trump will decide to impose tariffs on Europe.

Next week, the U.S. will release the durable goods orders data for April on Tuesday. On Wednesday, the FED will release the minutes of the May policy meeting. Finally, the U.S. Bureau of Economic Analysis will release the PCE Index on Friday. Among them, the PCE is considered an important inflation index, which will attract special attention from the market, as it directly impacts the FED's monetary policy.

According to FedWatch, the market is currently pricing in about a 27% chance that the FED will cut interest rates by 0.25% in the upcoming July meeting. With the Trump administration's tariff policy, inflationary pressures in the U.S. have been and are under significant strain. If the core PCE index for April rises more than expected, it could lead the FED to maintain interest rates in the July meeting. In this scenario, the USD could rise again, putting pressure on gold prices next week to drop. However, the gold price next week will find it hard to drop significantly if the PCE rises, as it is still supported by other factors, such as tariffs and geopolitical conflicts...

According to technical analysis, if the gold price surpasses 3,366 USD/oz, it could target 3,430 USD/oz. Conversely, if it does not surpass 3,366 USD/oz, it could drop to 3,290 - 3,300 USD/oz, followed by 3,200 - 3,250 USD/oz.