It's anyone's game for gold next week as prices remain below $1,800
(Kitco News) - Gold investors should prepare for increased market volatility in the near term as sentiment is extremely mixed among Wall Street analysts, according to the latest Kitco News Weekly Gold survey.
While Wall Street is caught in a three-way tie for this week's survey, there is a silver lining for the precious metal. Retail investors remain extremely bullish and there is growing interest on Main Street.
This week 15 Wall Street analysts participated in Kitco News' gold survey. For only the second time on record, the survey showed a three-way tie. Each scenario garnered five votes.
Meanwhile, A total of 1,527 votes were cast in an online Main Street poll. Of these, respondents, 1,024 or 67%, looked for gold to rise next week. Another 304, or 20%, said lower, while 199 voters, or 13%, were neutral.
Participation in this week's survey was the highest since mid-June when the gold market saw a flash crash that many saw as a buying opportunity.
The mixed sentiment is not surprising as the gold market finishes what has already been a volatile week as prices dropped sharply below $1,800 an ounce early in the week after the White House announced that President Joe Biden nominated Jerome Powell to remain as Chair of the Federal Reserve. The markets took that as a hawkish signal and gold prices dropped to a three-week low.
However, heading into the weekend, renewed fears of the COVID-19 pandemic have created a safe-haven bid in the precious metal, pushing prices back resistance at $1,800 an ounce.
Many analysts said that gold's selloff at the start of the week was overdone. Some analysts note that while Powell might not be perceived as dovish as the other candidate, Lael Brainard, he is by no means a monetary policy hawk.
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"Jerome Powell is no hawk and the selloff on his re-appointment as Federal Reserve Chairman was absurd," said Adrian Day, president of Adrian Day Asset Management.
Colin Cieszynski, chief market strategist at SIA Wealth Management, said that he sees gold prices move higher next week as markets continue to react to a new variant of the COVID-19 virus from South Africa.
"The emergence of a new COVID variant has rattled investors this morning, sparking a flight of capital into traditional havens like gold. Crude oil and copper are getting hammered, so commodity inflation may ease. Support for gold has increased lately, but the reasons why appear to be changing.," he said.
On the bearish side, some analysts have said that the recent selloff created significant chart damage that needs to be repaired.
Ole Hansen, head of commodity strategy at Saxo Bank, said that he remains neutral on gold if prices can't get back above $1,835. He added that weakness in silver and platinum doesn't bode well for gold next week.
Marc Chandler, managing director at Bannockburn Global Forex, said that while COVID-19 fears have helped the gold market cut its losses, he is looking for lower prices in the near term.
"Gold's bounce stopped in front of 1816, a key retracement target. Provided this holds, my bias is lower, either on a recovery in rates or on a broad liquidation of commodities. I look for support around $1,776," he said.
Adam Button, head of currency strategy at Forexlive.com, said he is concerned about a new hawkish shift among U.S. central bankers. He added that rising inflation pressures could force the Federal Reserve to tighten monetary policy sooner than expected.
"When doves make hawkish shifts, it's a bad time to own gold. The comments from [San Francisco] Fed President Mary Daly suggest a broader pivot at the FOMC towards a quicker taper. Ultimately, there will be a buying opportunity, but the fundamentals at the moment are urging caution," he said.