The gold bulls are back and looking towards $1,900
(Kitco News) - The gold market could see further gains in the short term as sentiment has significantly shifted among both Wall Street analysts and Main Street investors, according to the latest Kitco News weekly gold survey.
Gold bulls appear to be out in full force again as the precious metal has seen a strong reversal in the first few trading days in December. The gold market is trading at its highest level in a week, bouncing off a four-month low Monday.
"We are seeing a strong spike reversal after gold bounced off the critical support at $1,767 an ounce and looking at technicals, the short-term trend is pointing to slightly higher prices next week," said Darin Newsom, president of Darin Newsom Analysis.
This week 14 analysts participated in the survey. A total of 10 voters, or 71%, called for gold prices to rise next week; at the same time, one analyst, or 7%, called for lower prices; finally, three analysts or 21% were neutral on gold.
Meanwhile, a total of 1,147 votes were cast this past week in online surveys. Among those, 743 voters, or 65%, said they were bullish on gold next week. Another 231 participants, or 20%, said they were bearish, while 173 voters, or 15%, were neutral on the precious metal.
Sentiment has seen a dramatic shift from the previous week, where the majority of analysts were bearish on gold, and bullish sentiment among retail investors was at a multi-year low. The gold market is looking to end this week up more than 3%. February gold futures last traded at $1,835.20 an ounce.
Most analysts have noted that gold's bounce off November's four-month low has created strong technical bullish momentum in the marketplace.
Michael Moor, founder of Moor-Analytics.com, said that he could see gold prices pushing to $1,890 before this reversal starts to lose traction.
Not only is the gold market seeing strong technical support for higher prices, but some analysts also note that the precious metal also continues to enjoy strong fundamental support.
Some analysts noted that November's disappointing employment report is further evidence that the U.S. government and Federal Reserve will have to unleash more stimulus to revive the beleaguered economy. Friday, the Bureau of Labor Statistics said 245,000 jobs were created last month; however, economists were expecting to see job gains of around 480,000.
"Central banks around the world have in unison done the same thing: turning on the printing presses full blast, and that is not going to end anytime soon," said Sean Lusk co-director of commercial hedging with Walsh Trading.
Lusk said the thinks gold prices have room to run to $1,900, which will be a critical resistance level to watch in the near-term.
"We need to take out $1,904 to rekindle any kind of talk about going back to the all-time highs above $2,000," he said.
Colin Cieszynski, chief market strategist at SIA Wealth Management, is also bullish on gold in the near-term as he sees more stimulus measures on the horizon.
"U.S. politicians seem to now be under some pressure to get a new spending/stimulus deal done to avoid a government shutdown which could help to boost gold in the coming days," he said.
Although there is strong bullish sentiment in the marketplace, some analysts see strong resistance at $1,850, and the market could need a little more time before it breaks through.
"Though I remain very bullish over the medium and longer-term, in the immediate, gold has a little more consolidation to get through," said Adrian Day, CEO of Adrian Day Asset Management.
The lone bear in this week's survey was Daniel Pavilonis, senior market strategist at RJO Futures. He said that the market is looking a little exhausted.
He added that he could see gold prices push back below $1,800 an ounce as the market moves through a bottoming process.
"With vaccine news, maybe the market is perceiving light at the end of the tunnel, and excess stimulus is the thing of the past. If we are looking in that direction and the economy starts to get better, and the dollar strengthens, this will not bode well for the metals," he said.