Sentiment in the gold market is slowly shifting back to the bullish side as the precious metal’s resilience in the face of rising bond yields shines through. However, some analysts are warning that there is still insufficient momentum to push gold prices through critical resistance levels.
The latest Kitco News Weekly Gold Survey shows a slightly bullish tilt among Wall Street analysts, while sentiment among Main Street retail investors is evenly balanced. The rise in optimism comes after two weeks of bearish sentiment in the marketplace.
The improved outlook also comes as gold prices see slight positive gains for the week, ending a three-week losing streak with price holding support above $1,900 an ounce. August gold futures last traded at $1,933.30 an ounce, up 0.20% from last week.
Kevin Grady, president of Phoenix Futures and Option, said that in the current environment, gold has room to move higher in the near term. However, he added that a lack of clarity from the Federal Reserve on the future path of its monetary policy is keeping a lot of investors on the sidelines.
“Gold investors are in a holding pattern,” he said. “There is a lot of congestion between $1,945 and $1,955, and if we are going to get above that area to bring some confidence back into the market. To do that, we need some clarity from the Fed. If they say they are done raising rates, then I think gold has a chance to get back to $2,000.”
This week, 19 Wall Street analysts participated in the Kitco News Gold Survey. Among the participants, ten analysts, or 53%, were bullish on gold in the near term. At the same time, five analysts, or 26%, were bearish for next week, and four analysts, or 21%, saw prices trading sideways.
Meanwhile, 483 votes were cast in online polls. Of these, 182 respondents, or 38%, looked for gold to rise next week. Another 181, or 37%, said it would be lower, while 117 voters, or 24%, were neutral in the near term.
According to the survey, retail investors see gold prices pushing to $1,941 an ounce by the end of next week.
Ole Hansen, head of commodity strategy at Saxo Bank, said that he is bullish on gold as the market is ending the week above an important initial resistance point, even as yields on 10-year bonds pushed back above 4%.
“Having survived having the kitchen sink thrown at it, it will be interesting to see whether gold can find some fresh momentum above 1930 next week and will that force some additional short covering,” he said.
Adrian Day, who has been neutral on gold in the near term recently, now sees more upside potential for the precious metal as weaker unemployment data supports growing expectations that the Federal Reserve is quickly coming to the end of its tightening cycle.
Earlier Friday, the Bureau of Labor Statistics said that 209,000 jobs were created in June, missing expectations as economists were looking for job gains of around 224,000.
“The latest U.S. jobs number, though heralded as strong, were actually below estimates, but the market is now resigned to another rate hike this month,” Day said. “This is priced in now, and the market can slowly regain some of the recently lost ground. Gold still has further to go on the recovery from the late June sell-off.”
Marc Chandler, managing director of Bannockburn Global Forex, said he sees gold prices testing resistance at $1,955 an ounce this week.
Written by Neils Christensen for KITCO ~ July 7, 2023
