Gold prices: Market awaits hints from US Fed Reserve on timeline for rate hike

Analysts are unsure as to how gold prices will move next week and a majority now await the US Federal Reserve monetary policy statement, due out on 29 April, for hints as to when the Fed will hike interest rates this year.

Any hint in the statement that a June rate hike is off the table will be positive for gold prices.

Analysts will also be tracking US first-quarter GDP data, due out on 29 April. Dismal growth figures from the world's leading economy will boost gold's safe-haven status.

Bullion could also draw support from unresolved bailout talks in Greece. A Greek default and the nation's exit from the Eurozone will buoy gold prices in the long-term.

Of the 32 market professionals polled by a Kitco News survey, 20 responded this week. Eight analysts were neutral on prices, six were bullish on prices and an equal number were bearish.

Meanwhile, of the 514 votes collected in a separate Kitco online survey, 263, or 51%, were bearish on the gold market next week; 153 were bullish on gold prices and 98 were neutral.

Analysts warned that the Fed statement, due out on Wednesday, many not provide clarity on the timing of a rate hike.

Bart Melek, head of commodity strategy at TD Securities told Kitco News that he was expecting the Fed to be fairly tight-lipped on when they will begin hiking rates.

Jessica Fung, commodity analyst at BMO Capital Markets said that she was neutral on gold prices in the coming week but added there was a bearish bias in the marketplace. She said that her conversations with a variety of clients revealed that most were neutral on gold.

Fung said: "Right now it is all about the Federal Reserve. Everyone is waiting to see where interest rates are heading. Nobody wants to buy gold so that might lead to lower prices."

Melek said: "You can't ignore the data. It has been terrible, disappointing. It seems to be more insidious than just cold weather. The risks are building for a rate hike later in the year."

Gold drops

US gold futures for delivery in June finished the week at $1,175 an ounce.

Prices are down 2.4% from 20 April's opening price, and have logged their third successive weekly negative close. Bullion lost out to relatively stronger global equity markets.

Spot gold traded 1.4% lower at $1,177.03 an ounce on 24 April.

Prices are down 2.2% for the week as a whole, logging their biggest weekly loss in seven weeks.