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We Could See Fireworks for Gold Prices This Summer

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Goldprices are under pressure, unable to break away from trading in a tight trading range, but the summer could bring a pleasant surprise according to one expert.

On Wednesday, the gold market was seeing little reaction to relatively expected minutes from last month's Federal Reserve monetary policy meeting.

"This has been a tough market and we have just been trading the ranges," said Peter Hug, global trading director for bullion dealer, Kitco Metals.

"There are a number of issues out there that would not allow me to go short into the market and be able to sleep at night. So we are trying to pick off the support lines and look for bounces, Hug said.

But Hug added that summers can bring bizarre occurrences to the precious metals market.

"There are times - especially if these markets start to soften in June, July when the refineries tend not to have peak production - that we could see fireworks," Hug said.

The minutes showed that the U.S. central bank is doubling down on its patient approach and is in no hurry to adjust monetary policy one way or another.

Spot gold inched up 0.1% to $1,275.65 per ounce, having fallen to its lowest level since May 3 on Tuesday at $1,268.97.

Gold is now more than 5% below its late February peak of $1,346.73 per ounce.

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This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.

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