Sentiment in gold is slightly bullish, but not enough to bring prices back above $1,800 next week

Sentiment in gold is slightly bullish, but not enough to bring prices back above $1,800 next week
Sentiment in gold is slightly bullish, but not enough to bring prices back above $1,800 next week

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(Kitco News) – Gold bulls will need to be cautious next week as market sentiment cannot provide any clear direction for prices in the near term.

The gold market ends the week holding onto most of the gains from this month as the price maintains support around $1,750 an ounce. But prices could struggle in the near term as sentiment among Wall Street analysts and retail investors has only a slight bullish tilt, according to Kitco News’ latest weekly gold survey.

Some analysts note, however, that after gold’s nearly 11% rally over the past three weeks – with prices pushing to a striking distance of $1,800 – some consolidation would be healthy.

Sean Lusk, co-director of trade coverage at Walsh Trading, said gold prices could struggle next week as he expects the Federal Reserve to signal that it will continue its aggressive rate hikes. of interest.

“At the end of the day, inflation remains high, so the Federal Reserve isn’t done raising interest rates,” he said.

However, Lusk added that investors should continue to pay attention to the long-term outlook. Gold and silver will look attractive as rising interest rates push the US economy into a recession, he said.

“I would look to buy the dips in this correction, but not aggressively, because we just don’t know what the Fed will do,” he said. “Investors need to ask themselves, with a recession coming, do you want to hold stocks or a safe-haven asset like gold.”

Phillip Streible, chief market strategist at Blue Line Futures, said he was also bearish on short-term prices, but was also looking to buy gold at lower prices.

“I think you just need to be patient,” he said. “The Fed’s job is not done yet.”

Streible noted that the inverted yield curve between two-year and 10-year bonds continues to widen, signaling that the US economy is potentially heading into a severe and prolonged recession.

This week, 20 Wall Street analysts participated in the Kitco News Gold Survey. Among the participants, eight analysts, or 40%, called for higher gold prices next week. Meanwhile, seven analysts, or 35%, were bearish on gold in the near term, and five analysts, or 25%, were price neutral.

Meanwhile, 495 votes have been cast in Main Street online polls. Of these, 221 respondents, or 45%, expected gold to rise next week. Another 177, or 36%, said it would be lower, while 97 voters, or 20%, were short-term neutral.

Sentiment among retail investors has fallen sharply from last week’s five-month high; meanwhile, interest in the precious metal has also waned with low turnout in online polls this week.

The shifting sentiment comes as gold prices end the week down nearly 1%. However, gold prices are still up more than 8% since hitting a two-year low in early November. December gold futures last traded at $1,754 an ounce.

Some analysts said renewed US dollar momentum, buoyed by hawkish comments from members of the Federal Reserve, could weigh on gold prices next week.

“We expect the Federal Reserve to continue to tone down the overreaction to the last Fed meeting and that will weigh on gold,” said Adrian Day, president of Adrian Day Asset Management.

However, Day also said that the central bank’s hawkish monetary policies are about to run their course, which will ultimately be positive for gold.

“We are clearly approaching a time when the economic pain of what the Fed has already done is starting to be evident,” he said. “With the ECB reportedly easing its tightening, and other banks doing the same, it only reinforces that the Fed will soon start easing its tightening.”

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. This is not a solicitation to trade commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for loss and/or damage resulting from the use of this publication.

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