Gold prices could drop next week as the prospect of higher US interest rates sooner than later is expected to dent the metal's safe-haven status.
The US Federal Reserve's FOMC will meet on 16-17 June and Fed boss Janet Yellen could reiterate, in her press conference, that rates will rise this year, a negative for the precious metal.
However, prices could log gains towards the end of the week if the Fed statement and Yellen's comments reveal very little about future US monetary policy.
Prices could also log modest gains if the impasse between Greece and the International Monetary Fund's (IMF) negotiating team continues: the gridlock could spur some physical demand in the nation. The IMF dramatically left talks with Athens this week, saying talks were deadlocked over finances, taxes and pensions, the main points Greece and its creditors have stumbled over for a long time.
Of the 34 market experts polled by a Kitco News Survey, 20 responded this week. Twelve participants were bearish on prices, five bullish and three neutral. Respondents included futures traders, bullion dealers and investment bankers.
Meanwhile, of the 421 votes polled in a separate Kitco online survey, 297 participants, or 71%, said they expected lower gold prices next week. As many as 75 were bullish on prices, while 49 were neutral.
Bart Melek, head of commodity strategy at TD Securities, told Kitco that volatility could be high on 17 June as the Fed lowers its economic projections and interest rate forecast, which will be positive for gold; but he added that Yellen could reiterate that interest rates will inevitably move higher this year, which will be negative for gold.
Bernard Dahdah, precious metals analyst at Natixis said the uncertainty in Greece could lead to an increase in physical demand within the country. He added that there is new optimism among investors that Europe could survive if Greece does separate; and within the country, nationals could buy gold to safeguard their capital.
KC Chang, commodity strategist at IHS, said: "The [US] economy is still growing but it is not forcing the Fed to raise rates. The Fed will remain data dependent and the gold market will now take a wait-and-see approach.
"Tensions could rise in the marketplace if there is no clarity in the talks [in Greece] next week and that would be supportive for gold."
Capital Economics said in a note to clients: "Most commodity prices have moved in narrow ranges in the past week...Encouragingly, the price of gold held steady despite further signs of economic recovery in the US (in the form of stronger retail sales in May).
"This supports our view that precious metals can still rally later in the year, as the first Fed rate hikes are now largely priced in."
Gold inches up
US gold futures for delivery in August finished $1.20 lower at $1,179.20 an ounce on 12 June.
Prices rose a meagre 0.7% since 8 June's open.