Make Kitco Your Homepage

Gold price stuck in neutral around $1,800 and going nowhere fast

Kitco News

Editor's Note: With so much market volatility, stay on top of daily news! Get caught up in minutes with our speedy summary of today's must-read news and expert opinions. Sign up here!

(Kitco News) - The gold market is well anchored around $1,800 an ounce and might not go anywhere anytime soon as market sentiment among Wall Street analysts remains neutral to bearish, according to the latest results of the Kitco News Weekly Gold Survey.

The results also showed that retail investors remain bullish on gold; however, participation in the survey remains low.

Analysts note that gold prices are caught smack in the middle of opposing forces as the global economy faces rising inflation; however, those threat are being met with growing hawkish sentiment from central banks. Added to the mix is rising volatility in financial markets as central banks remove liquidity, according to analysts.

This week 17 Wall Street analysts participated in Kitco News' gold survey. Among the participants, five, or 29%, called for gold prices to rise. In the same survey bearish and neutral votes each garnered six votes or 35%.

Meanwhile, 683 votes were cast in online Main Street polls. Of these, 385 respondents, or 56%, looked for gold to rise next week. Another 152, or 22%, said lower, while 146 voters, or 21%, were neutral in the near term.

Kitco Gold Survey

Wall Street

Bullish
Bearish
Neutral

VS

Main Street

Bullish
Bearish
Neutral

The outlook on gold comes as prices end the week up 1% from last week's sharp selloff following a hawkish outlook from the Federal Reserve and its leader Jerome Powell. April gold futures last traded at $1,807.10 an ounce.

Looking ahead, some analysts expect that gold prices will struggle as markets continue to price in more aggressive action from the U.S. central bank. Expectations continue to grow that the Federal Reserve could raise interest rates by 50 basis points in March as it kicks off a new tighten cycle.

Adding to those expectations is strong labor market data after the Bureau of Labor Statistics said 467,000 jobs were created in January. The data significantly beat expecations as some economists were looking for job losses.

The inflation threat also continues to grow with the report saying wages grew 0.7% last month and are up 5.7% in the last 12 months.

"It seems to me that investors are focusing more on wage inflation keeping pressure on the central banks to raise interest rate," said Colin Cieszynski, chief market strategist at SIA Wealth Management.

Cieszynski said that gold investors should pay close attention to next week's inflation data, to be released Thursday.

Frank McGee, precious metals dealer at Alliance Financial, said that because of the jobs data and rising wage inflation, the Federal Reserve is significantly behind the curve and will have to play catch up, which could weigh on gold prices in the near-term.


Scotiabank lowers gold price forecast to $1,800 as Fed prepares to tighten monetary policy

Darin Newsom, president of Darin Newsome Analysis, said that the only reason he is bullish this week is because he flipped a coin and it came up heads.

"There is no clear pattern on April gold's daily chart. The contract could rocket to a test of its recent high of $1,856.70 or take out its recent low of $1,780.60, for no reason either way," he said. "Setting the ludicrous January jobs numbers (and ridiculous December revisions) aside, the US dollar still looks to be in a short-term downtrend. If that holds, then gold could see some buying interest early next week."

Ole Hansen, head of commodity strategy at Saxo Bank said that while he is neutral on gold in the near-term, he sees potential for the precious metal as it has managed to hold $1,800 an ounce following the latest jobs numbers.

"If we can stay above $1,800 an ounce when markets are pricing in a 50-basis point hike in March then  it might have a chance," she said. "There appears to be an underlying bid in the gold market that is supporting prices."

Hansen said that until gold break resistance at $1,825 or support at $1,780 he remains neutral.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.