Gold prices ended the week close to their highest levels in more than three months. Thus, the yellow metal made a strong start to December. This creates a significant bullish sentiment in the market. However, the question of whether the sentiment will be enough to pull investors over the edge remains unanswered.
“Gold continues to play its role as a store of value”
The latest Kitco Weekly Gold Poll shows that Wall Street analysts and Main Street retail investors are up significantly in gold in the near term. This is also due to the fact that the market is seeing solid technical bullish momentum. The gold rally began Wednesday after Federal Reserve Chairman Jerome Powell said it would be appropriate for the Fed to slow the pace of tightening in December.
At the same time, analysts say it provides a new safe-haven support under growing recession fears. Colin Cieszynski, chief market strategist at SIA Wealth Management, notes that gold continues to rise even as rising interest rates continue to support the US dollar. In this context, the strategist makes the following statement:
Investors are beginning to realize that gold is still an important defensive asset. The shiny metal continues to play its role as a store of value.
“The stars are aligned for gold!”
Adam Button, head of currency strategy at Forexlive, says gold benefits from positive seasonal factors as pre-holiday demand increases. Continuing his explanations in this direction, Button shares the following comment:
The seasonal trend of gold purchase in December started from the first day of the month. The stars are well positioned for gold as the Fed tilts and the US dollar slides.
Bulls strong in this week’s gold poll
This week, 18 Wall Street analysts voted in the Kitco Gold Poll. Among the participants, 12 analysts (67%) expect gold to rise in the near term. Six analysts (33%) forecast a decline for the next week. By the way, there were no neutral votes in this week’s poll.
1,018 respondents voted in an online Main Street poll. Of these, 715 (70%) forecast gold to rise next week. Another 188 (18%) expect it to sail lower. 115 voters (11%) chose to remain neutral in the near term.
“Things get fun here!”
The uninterrupted optimistic outlook comes as gold prices close the week with a 2% increase. Additionally, gold futures for February delivery were trading at $1,809, which also affected the outlook. Meanwhile, even a stronger-than-expected November jobs report and strong wage growth weren’t enough to dampen gold’s new momentum.
cryptocoin.com As you follow, on Friday the Bureau of Labor Statistics announced that 263,000 jobs were created in November. Meanwhile, economists had expected 200,000 job gains. At the same time, wages rose 5.1% for the year, well above expectations. Barchart senior market analyst Darin Newsom says next week will be exciting for the precious metal as the current rally could be seen as a technical peak. However, he adds that the momentum is clearly bullish. From this point of view, the analyst draws attention to the levels:
For technical analysts, markets like gold cause drinking problems. Given that the weekly stochastics have not clearly moved above the 80% overbought level, February gold looks like it has time and place to go higher next week. However, things get fun here. The target area is between $1,807.20 (this week’s high of $1,818.70) and $1,861.20.
Adrian Day does not expect a rise in gold price in the near term
However, not all analysts expect gold to rise, at least in the near term. Adrian Day, head of Asset Management, predicts that gold prices will fall next week, although he remains a long-term gold bull. He explains the reason for this prediction as follows:
A decline began with the latest US jobs report showing more new jobs than expected. Besides that, we are likely to see a natural correction in the sharp weekly rally. Only then will more market participants begin to agree that the Fed and other central banks will not be able to meet their inflation targets without causing a serious recession. So, signs of an impending recession are gathering.
Marc Chandle expects these levels ahead of FOMC meeting
Marc Chandler, managing director of Bannockburn Global Forex, says markets are too optimistic about Powell’s so-called dove stance. Therefore, he predicts that gold will decline next week. The November employment report draws attention to the increase in wages. So, he notes, it shows that the Fed still has to deal with a growing inflation problem. It also points to the following levels for the yellow metal:
Gold then seems likely to reject the false break above the 200-day moving average. I expect $1,765 and maybe $1,750 before the mid-month FOMC meeting.
