Gold prices: Bullion to benefit from likely financial markets volatility

Analysts are unsure as to how gold prices will move next week and expect bullion to take its cues from the financial markets, where any sign of volatility could help boost the metal's safe-haven status.

Analysts will be tracking the Bank of England's (BoE) interest rate decision alongside GDP data from the UK, Germany and from the Eurozone next week.

They will also be watching retail sales and manufacturing data due out in the US, and the financial markets' reaction to economic data through the week.

The yellow metal could also draw support from any unexpected geopolitical event.

The Greek crisis, for instance, could prop up prices if Athens and EU officials fail to reach a deal needed to release bailout money to the cash-strapped nation.

Of the 33 market experts polled by a Kitco News Survey, 21 responded this week. Four participants were bullish on prices while seven were bearish and 10 were neutral on prices.

Meanwhile, of the 208 votes collected in a separate Kitco online survey, 93 participants, or 45%, said they expect higher gold prices next week. Around 75 were bearish on prices while 40 were neutral.

Analysts' take

Ole Hansen, head of commodity strategy at Saxo Bank, speaking to Kitco, described the gold market as a "coin toss," as it remained directionless amid mixed economic data.

Bart Melek, head of commodity strategy at TD Securities, said 8 May's US non-farm payrolls report had eliminated a June rate hike from the table.

Melek added that gold was still stuck in its range because the data did not push back the timing of the first rate increase "past September" either.

Jessica Fung, commodity analyst at BMO Capital Markets, said current market conditions could last until the next US Federal Reserve FOMC meeting scheduled for mid-June.

Fung added that the only thing that could break gold out of its current range was a "black swan" geopolitical event.

George Gero, vice president and precious-metals strategist at RBC Capital Markets Global Futures said that continued fund allocation into equity markets next week could hit prices.

However, Julian Jessop, head of commodity research at Capital Economics, said that most financial markets were looking a little stretched, which could create volatility, ultimately supporting gold prices.

Gold ends higher

US gold futures for delivery in June finished $6.70 lower at $1,188.90 an ounce on 8 May.

Prices gained 1% for the week as a whole, after revisions to US payrolls data, from March and February, sparked speculation that the Fed could refrain from hiking rates in the immediate future.

Spot gold traded 0.3% higher at $1,188 an ounce on 8 May.