Market sentiment does not provide a clear direction for gold prices in the near term. Therefore, gold bulls will need to be cautious next week.
“Gold will continue to struggle”
The gold market closed the week holding most of this month’s gains as the price held the support around $1,750. However, sentiment among Wall Street analysts and individual investors is only slightly bullish, according to the latest Kitco Weekly Gold Survey. Therefore, there is a high probability that the yellow metal will continue its struggle in the near term.
However, some analysts are pointing out that some consolidation will be healthy as gold approaches the striking distance of $1,800 after gold’s rise of nearly 11% over the past three weeks. Sean Lusk, co-director of commercial hedging at Walsh Trading, says gold prices will likely struggle next week as he waits for the Federal Reserve to signal that it will continue with aggressive rate hikes. In this context, Lusk makes the following statement:
At the end of the day, inflation remains high. Therefore, the Federal Reserve has not finished raising interest rates.
“I would like to buy the drops, but…”
But Sean Lusk adds that investors should continue to pay attention to the long-term outlook. He also states that gold and silver will look attractive as rising interest rates drag the US economy into recession. Based on this, he makes the following assessment:
I would love to buy the dips in this fix. However, not in an aggressive way. Because we don’t know what the Fed will do. Investors should ask themselves, with an impending recession, whether you want to hold a stock or a safe-haven asset like gold.
“I think you just have to be patient”
Phillip Streible, chief market strategist at Blue Line Futures, says he’s also bearish on prices in the near term. However, he also notes that he wants to buy gold at lower prices. Streible said, “I think you just have to be patient. The Fed is not done yet,” he says.
Phillip Streible notes that the inverted yield curve between two-year and 10-year bonds continues to widen. He notes that this signals that the US economy is heading towards a potentially serious and prolonged recession.
Bulls lead in gold survey results
This week, 20 Wall Street analysts voted in the Kitco Weekly Gold Poll. Eight analysts (40%) among respondents predict that gold prices will rise next week. However, seven analysts (35%) think the bears will win on gold in the near term. The remaining five analysts (25%) chose to remain neutral on prices.
Meanwhile, 495 individual respondents voted in online Main Street polls. Of these, 221 (45%) predict that gold will rise next week. Another 177 (36%) say prices will be lower. The remaining 97 voters (20%) remained neutral in the near term. The sentiment among retail investors dropped sharply from the five-month high last week. At the same time, interest in the precious metal declined with low turnout in this week’s online surveys.
Will Gold finally be happy?
The changed sentiment is also due to the fact that gold prices closed the week down by about 1%. However, precious metal prices are still up more than 8% since falling to a two-year low in early November. Meanwhile, the US dollar regained momentum, supported by hawkish comments from Federal Reserve members. Some analysts say the renewed momentum will put pressure on bullion prices next week. Adrian Day, head of Adrian Day Asset Management, said:
We expect the Federal Reserve to continue to scale down its exaggerated response to the Fed’s latest meeting. This will put pressure on the bottom.
However, according to Day, the end of the Fed’s hawkish monetary policies is near. So, it will ultimately be positive for the yellow metal. In this direction, Day records the following statements:
We are approaching a time when the economic pain from what the Fed has already done is beginning to become apparent. As the ECB slows its tightening and other banks do the same, it only raises the possibility that the Fed will soon begin to loosen its tightening.
