Rua Gold Inc. (TSXV: RUA, OTC: NZAUF, WKN: H8E)
An Emerging Gold Explorer with Two Highly Prospective Land Packages in New Zealand’s historical gold fields.
After breaking above $2,400 nearly a month ago, gold prices have begun to adjust due to waning expectations of Fed interest rate cuts and mitigated geopolitical tensions.
However, the precious metals market seems to have attracted new bullish interest this week, with the June gold futures contract hitting a near two-week high of $2,375.40 an ounce by the close of trading on Friday (10 May), up nearly 3% from a week ago.
Meanwhile, the May silver futures contract last traded at $28.310 an ounce today, up 6 per cent from last Friday.
A preliminary survey of consumer confidence from the University of Michigan showed that optimism fell to a five-month low, while inflation expectations rose to a nearly two-year high.
Naeem Aslam, chief investment officer at Zaye Capital Markets, said he expects the rally in gold and silver to end in a sell-off in the short term. The reason for this is that jobs data and other economic data suggest the economy is slowing down and the Federal Reserve will be forced to keep interest rates higher for longer.
Alex Kuptsikevich, Senior Market Analyst at FxPro, noted that the decline in the second half of April was more for technical reasons, and that although gold and silver are moving higher, there is still a lot of work to be done to attract new capital and push the prices above the recent all-time highs.
Peter Granditch, a leading financial analyst and market strategist, said that while consolidation may continue, gold still has a few hundred dollars of upside to go as interest rates have peaked due to weak economic activity. However, he believes investors should remain patient.
With investors refocusing on economic fundamentals, some analysts note that next week will be crucial for a potential recovery and record highs for gold and silver.
Barbara Lambrecht, a precious metals analyst at Commerzbank, wrote in a report on Friday that if consumer prices rise significantly again, expectations of a Fed rate cut could become more volatile. Of course, if economic conditions get worse, US stocks will be at risk of falling, while gold will still be favoured by investors as a safe-haven asset.
Next Wednesday, the U.S. CPI data for April and the retail report will be published, which may help to drive gold and silver prices higher, or not.
