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(Kitco News) – Rising bond yields and stronger US dollar add investor apathy in the gold market and bolster bearish sentiment among Wall Street analysts and retail investors, latest say Kitco News Weekly Gold survey results.
Sean Lusk, co-director of trade hedging with Walsh Trading, said gold will continue to be stuck because there is a lack of conviction in the market.
“In the long term, we are bullish on gold because US debt levels are getting out of hand, but in the short term the rallies will continue to be sold,” he said.
Lusk added that gold prices need to get back above $ 1,830 an ounce before they start attracting new investors. He also noted that in addition to higher bond yields and the US dollar, gold continues to compete with record stock market valuations.
“If gold has any chance of going up, we must see some uncertainty in the stock markets,” he said.
This week, 15 Wall Street analysts took part in the Kitco News gold survey. Bearish and neutral sentiment was tied this week, each garnering seven votes or 47%. At the same time, an analyst or 7% was bullish on gold.
This week, participation in the Kitco News online survey increased from a two-year low last week; however, it is still below the average participation rate.
A total of 757 votes were cast in the online polls. Of these, 339 respondents, or 45%, expected gold to rise next week. Another 294, or 39%, said lower, while 124 voters, or 16%, were neutral.
Along with the low turnout, bullish sentiment among retail investors is at its lowest since early March.
The change in sentiment in the gold market comes as prices are down more than 2% this week. December gold futures traded last at $ 1,752.30 an ounce. The precious metal fell sharply on Thursday following stronger-than-expected economic data, including a 07% rise in retail sales in the United States.
For many analysts, the gold market faces tough headwinds next week as the Federal Reserve holds its monetary policy meeting. U.S. monetary policy is increasingly uncertain as some economists have noted that recent economic data may support the Fed’s publication of plans to cut bond purchases next week.
However, some analysts also note that even though they are bearish on gold, it could see a brief jump to the upside if the US central bank delays these plans.
“I like that gold stays soft in the first half of next week. I see $ 1,780 as resistance,” said Marc Chandler, managing director of Bannockburn Global Forex. “When the FOMC meeting is over, we might see ‘rumors of a hawkish Fed selling’ and gold could be bought.”
Colin Cieszynski, chief market strategist at SIA Wealth Management, said he could also see gold rise next week as the Fed delays its reduction plans.
Lusk noted that while gold could be the subject of an offer at the end of next week, the Federal Reserve is still on the path to tightening monetary policy, which could cap the gains of short-term gold.
Adrian Day, chairman of Adrian Day Asset Management, was the only bullish voice in this week’s survey. He noted that the precious metal appears to be oversold in the short term.
“Gold is expected to rebound after the extraordinary fall of the past few days. Nothing fundamental has really changed,” he said.
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 for informational purposes only. This is not a solicitation to trade in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.