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Rising investor sentiment looks for gold to retest $2,000 next week; gold bears have fled Wall Street

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(Kitco News) - After two weeks of consolidation below $2,000 an ounce, expectations have picked up that gold prices could reclaim that critical psychological level next week, according to the latest results of the Kitco News Weekly Gold Survey.

With the gold market heading into the weekend with solid gains, Wall Street bears have fled the market and gone into hibernation… for now.

Technically, the gold s weekly chart looks bearish but I wouldn t be selling any gold at this point,” said Darin Newsom, president of Darin Newsom Analysis. Gold and silver are the only hedges investors want with all the uncertainty around the world. And you can t argue with that sentiment.”

This week, 15 Wall Street professionals took part in this week’s poll. Among the participants, 12, or 80%, called for gold prices to rise; three analysts, or 20%, were neutral on the market and there were no bearish votes cast.

Although Wall Street analysts are unabashedly bullish on gold in the near-term, sentiment among retail investors has only ticked up slightly higher from last week’s eight-month low.

A total of 2,375 votes were cast in an online Main Street poll. Of these, 1356 respondents, or 57%, looked for gold to rise in the next week. Another 559, or 24%, said lower, while 460 voters, or 19%, were neutral.

Kitco Gold Survey

Wall Street

Bullish
Bearish
Neutral

VS

Main Street

Bullish
Bearish
Neutral

Many analysts have renewed their bullish calls for gold as inflation fears have picked up. Thursday, in a much anticipated speech during the annual Jackson Hole central bank summit, Federal Reserve Chair Jerome Powell said that the central bank will target average 2% inflation and put emphasis on 'broad and inclusive' employment.

“The Federal Reserve’s new extreme-dovish stance outlined by Fed Chair Powell at Jackson Hole, makes gold even more indispensable,” said Adrian Day, CEO of Adrian Day Asset Management.

Day added that he is also bullish on gold as there appears to have been a lot of pent-up demand for the precious metal during this consolidation phase.

“Gold has had plenty of opportunities to correct these last several weeks, but it seems to be resisting a meaningful sustained pullback,” he said.

Afshin Nabavi, head of trading with MKS (Switzerland) SA, said that he is bullish on gold as the price managed to hold critical near-term support above $1,900 an ounce. He added that with the U.S. dollar unable to break above an important resistance point, it looks like gold could head higher and push to $2,000 an ounce.

“You just have to look around at what is happening in the world,” he said. “Everything points to higher gold prices.”

Charlie Nedoss, senior market strategist with LaSalle Futures Group, said that he is also bullish on gold in the near-term as the Federal Reserve choses to support the labor market over inflation.

“For the Fed, low interest rates are not the issue, the unemployment rate is and that means they will do what they can to support the labor market and that will be good for gold,” he said.

Although Nedoss sees potential for gold to retest resistance at $2,000 next week, he added that the market action won’t get exciting until it pushes above $2,010.

Although there are currently no bears in the marketplace, some analysts are not convinced that the gold market has ended its consolidation period.

Adam Button, chief currency strategist at Forexlive.com, said that he is neutral on gold in the near-term as investors continue to digest the Federal Reserve’s new monetary policy stance.

Following Powell’s comments the yield on the U.S. 10-year note pushed to a two-month high and has stayed near that level heading into the weekend.

“While easier policy is a boost for gold, the bond market could be a headwind,” Button said.

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