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.
Last week, up until Friday, the gold market was relatively calm, trading within a narrow range. However, the final day brought an unexpected shock to gold investors. Following the release of the U.S. PMI data, the price of spot gold plummeted from $2,363.71 to $2,317.70, with an intraday drop approaching 2%. It eventually settled down 1.62% at $2,321.87 per ounce.
Daniel Pavilonis, Senior Commodity Broker at RJO Futures, attributed the plunge in gold prices on Friday to hawkish remarks from the Federal Reserve, with Brainard even hinting at the possibility of no rate cuts. Looking ahead, Pavilonis maintains that a myriad of global instability factors will continue to drive gold prices higher in the coming months. However, for this week, he believes the likelihood of a decline is greater. He noted that gold prices have formed a double-top pattern around the $2,440 mark.
Nevertheless, further escalation of geopolitical tensions might provide bullish momentum for gold. Marc Chandler, Managing Director at Bannockburn Global Forex, predicts that geopolitics will drive gold prices higher this week. He believes that gold prices will test the $2,368 area and may subsequently move towards the $2,388-2,390 range.
From a technical perspective, the outlook for gold is not optimistic. Last Friday’s drop saw prices break below the neckline of a head-and-shoulders pattern, making the path of least resistance downward. The next support level is at $2,300. If this level fails, prices could fall to the May 3 low of $2,277 and then to the March 21 high of $2,222. Conversely, if gold prices rebound above $2,350, they will encounter several key resistance levels.
Analyzing market sentiment, Kitco News’ weekly gold survey shows a split among industry experts regarding the recent trend in gold prices, while retail investors remain optimistic. Specifically, among the 14 Wall Street analysts surveyed, five predict gold prices will rise this week, five expect a decline, and the remaining four foresee a sideways movement. Meanwhile, the proportions of retail investors bullish, bearish, and neutral are 55%, 18%, and 27%, respectively.
Adrian Day, President of Adrian Day Asset Management, belongs to the bearish camp, anticipating that gold prices will continue to fall this week. However, the market remains in a wait-and-see mode, awaiting news on China resuming gold purchases and crucial U.S. inflation and employment data that will determine the timing of a Fed rate cut. The most significant economic event this week will be the U.S. core PCE price index for May, with initial jobless claims to be released on Thursday.
