Gold prices set to rise next week as metal draws cues from weak US dollar

Gold prices are set to rise next week with the precious metal expected to draw its cues from a weak US dollar.

Of the 31 market professionals polled by a Kitco News survey, 22 responded this week. As many as 13 experts saw prices moving higher, three saw prices down and six saw prices sideways or unchanged.

Meanwhile, of the 421 votes collected in a separate Kitco online survey, 188, or 45%, were bullish on gold next week, 140 bearish and 93 neutral.

The greenback logged its worst week in four against a basket of currencies on 17 April, after US inflation data failed to ease concerns that recent soft US economic data could delay the Federal Reserve's first rate hike.

Teddy Sloup, senior market strategist at iiTrader, told Kitco that he was slightly bullish but that he was also watching his stop losses closely as the metal was stuck in a range.

Sloup said that a strong positive for gold was the US dollar, which was showing initial signs that it has finally hit a top. He added that for gold to gain any strong momentum, prices have to break above resistance between $1,221 and $1,225 an ounce on the back of a weaker dollar.

Ole Hansen, head of commodity strategy at Saxo Bank, said a weak greenback could end up taking some momentum away from the stock markets and that could aid gold prices.

Hansen added that he was bullish for gold in Europe because negative bond yields continue to buoy the metal's safe-haven status.

Adrian Day, president of Adrian Day Asset Management, said the market was starting to anticipate lower than expected US interest rates for a longer period of time, which will be negative for the dollar and positive for gold

Day said: "The dollar may have topped, so even though we are not expecting a sharp decline any time soon, we are unlikely to see higher dollar levels, and that will turn to the benefit of gold."

Capital Economics said in a note to clients: "A common response to our positive view on gold is that the precious metal is bound to struggle in an environment of dollar strength, especially if this strength is due to increases in US interest rates.

"However, while early Fed tightening is probably the biggest single threat to the gold price this year, we continue to expect other, more favourable factors to dominate over 2015 as a whole."

Gold slips

US gold futures for delivery in June finished at $1,203.10 an ounce on 17 April. Prices slipped 0.3% on the week.