Geopolitical risks were temporarily suspended after the ceasefire in Iraq, gold trends showed weakness, and gold prices fell for the second consecutive week.
A total of 17 analysts participated in the gold survey of information service Kitco this week. Wall Street sentiment turns bearish as market risk appetite increases weakens gold's momentum. Six of them (35%) expect gold prices to rise in the next week, nine (53%) predict gold prices to fall, and the remaining two (12%) believe gold consolidation sideways.
He said: "I think this trend will continue, especially if there is a trade agreement next, many geopolitical risks will eventually be left behind by the market. I think many of the factors that have supported gold demand over the past few months will start to fade, and oil prices may also go lower."
The two expectations of weak dollar and interest rate cuts have historically been regarded as the most reliable driving factors for gold, but this time it failed to provide effective support for gold prices, indicating that the geopolitical risk premium may fade faster than expected, especially after Israel and Iran reached a ceasefire agreement.
Daniel Pavilonis, senior market strategist at RJO Futures, pointed out that although market bets on the Federal Reserve's interest rate cut and concerns about its independence continue to heat up, he expects the demand for safe-haven by geopolitics and tariffs to continue to weaken.
Gold futures for August delivery fell 3% this week to $3,286.1.
In addition, despite rising inflation, bond markets and interest rate futures have limited response. Current market pricing shows that the probability of a rate cut in the Federal Open Market Committee (FOMC) meeting in July is only 20%, but the probability of a rate cut in September rises to 75%. Some traders even bet on a rate cut in both meetings, indicating that the market still maintains expectations of monetary policy easing despite the high inflation data.
TheDollar Index fell 1.47% over the past five trading days, providing strong support for dollar-denominated commodities, but gold failed to take advantage of the recent weakening of the dollar.