$1,750 gold price is still key even as short-term sentiment improves
(Kitco News) - Bullish sentiment in the gold market among Wall Street analysts is improving heading into the long week as the price managed to bounce off a double bottom below $1,700 an ounce. However, the market still has some major hurdles to clear, and retail investors remain skeptical that current price action can be sustained.
The latest Kitco News Weekly Gold Survey shows a fairly wide divide between Wall Street analysts and Main Street investors. Although gold has managed to bounce off last month's lows and end the shortened week above $1,700 an ounce, some analysts say that the true test is yet to come.
"Gold was knocked down fairly low this past week, so we are seeing a technical bounce," said Colin Cieszynski, chief market strategist at SIA Wealth Management. "I don't see a lot of tailwinds for gold to really push prices back up into solidly bullish territory."
Cieszynski added that for him to become outright bullish on gold, prices would have to push back above $1,780 an ounce.
This week 15 Wall Street analysts participated in Kitco News' gold survey. Among the participants, 11, or 73%, called for gold prices to rise; at the same time, bearish and neutral analysts were tied this week, with each viewpoint garnering two votes, or 13%.
Meanwhile, a total of 1,565 votes were cast in online Main Street polls. Of these, 636 respondents, or 41%, looked for gold to rise next week. Another 684, or 44%, said lower, while 245 voters, or 16%, were neutral.
While Wall Street was significantly bullish on gold in the near term, many analysts see the current move as a short-term corrective bounce. Darin Newsom, president of Newsom Analysis, said that he is short-term bullish on gold, but he is waiting to see if resistance at $1,756.10 can be broken.
He added that gold continues to face tough competition with the U.S. dollar, which appears to be in a long-term uptrend.
Mark Leibovit, publisher of VR Metals/Resource Letter, said that he is also bullish on gold in the near term but warned that the correction isn't over.
Along with gold's technical bounce, Marc Chandler, chief market strategist at Bannockburn Global Forex, said that rising inflation data could drive investors to gold as a hedge against rising price pressures.
Clive Lambert, technical analyst at Futurestechs, said that the gold trend is still bearish but is improving.
"A double bottom buy signal will only be triggered if/when we take out the high between these two lows, so [we] need a move through $1,754.2," he said.