(Kitco News) – According to the latest weekly gold survey from Kitco News, Wall Street analysts and Main Street investors see the potential for higher prices next week. The new bullish sentiment comes as gold prices end the week with a 2% gain testing a critical resistance point. December gold futures last traded at $1,783.30 an ounce.
Daniel Pavilonis, senior commodity broker at RJO Futures, said he sees a perfect setup for gold in the near term that will drive prices higher. He noted that gold’s rebound comes as sentiment has been significantly bearish.
Pavilonis said higher prices will create a short squeeze as the bears leave the market. However, fundamentally, a less hawkish US central bank for the rest of the year will support higher prices.
Although Federal Reserve Chairman Jerome Powell said further aggressive tightening remained possible, he added that the central bank would remain dependent on data. At the same time, he also said that at some point the Federal Reserve is expected to slow the pace of tightening as the economy feels the impact of rising interest rates.
“The Fed is signaling that it won’t be as hawkish on rates as it has been,” Pavilonis said. “Gold is off to the races now.”
This week, 16 Wall Street analysts participated in the Kitco News gold survey. Among the participants, 11 analysts, or 69%, were bullish on gold in the near term. Meanwhile, three analysts, or 19%, were bearish on gold. Two analysts, or 13%, voted neutral this week.
Meanwhile, 1,543 votes were cast in Main Street online polls. Of these, 961 respondents, or 62%, expected gold to rise next week. Another 334, or 22%, said lower, while 248 voters, or 16%, were short-term neutral.
Adam Button, chief currency strategist at Forexlive.com, said he was also bullish on gold in the near term.
“The subtle shift from the Fed was all the market needed and support at $1680 held,” he said. “There’s plenty of room for the upside of here.”
However, not all analysts are bullish on gold or see a sustainable rally next week. On Friday, analysts at TD Securities said in a note that they entered into a tactical short sale in gold as the market appeared overbought.
Phillip Streible, chief market strategist at Blue Line Futures, said he saw room for gold to hit $1,800 an ounce; however, he added that he would look to take profits at this level.
He added that markets could be a bit ahead of Fed pivot expectations. On Friday, the US Commerce Department’s Personal Consumption Expenditures Price Index showed inflation holding near a 40-year high at 4.8%.
“If inflation remains elevated, the Federal Reserve will continue to raise interest rates aggressively, which would limit gold’s recovery,” he said.
Marc Chandler said he was neutral on gold for the next week after two weeks of positive price action. He added that investors should pay attention to Friday’s nonfarm payrolls report.
“A number of around 250,000 is expected, which would be pretty solid pre-pandemic,” he said. “The 10-year yield fell to around 2.65%, after peaking around 3.50%. I suspect ahead of the jobs report, it might not come down much. gold to consolidate after stringing together consecutive weekly gains for the first time since May.”
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