Wall Street analysts, retail investors still see $2k gold in the near-term
Analysts note that the precious metal continues to benefit from safe-haven demand as uncertainty and volatility remain elevated due to Russia's ongoing war with Ukraine. Analysts note that global market fear is helping gold prices withstand rising bond yields and hawkish comments from the Federal Reserve Chair Jerome Powell.
"The gold market is in a very strong uptrend. In the current environment, there is very little that could derail the rally to higher prices," said David Madden, market analyst at Equity Capital.
This week, 17 Wall Street analysts participated in Kitco News' gold survey. Among the participants, 12 analysts, or 71%, called for gold prices to rise next week. At the same time, four analysts, or 24%, were bearish on gold in the near term, and one analyst, or 6%, was neutral on prices.
Meanwhile, 1,034 votes were cast in online Main Street polls. Of these, 743 respondents, or 72%, looked for gold to rise next week. Another 158, or 15%, said lower, while 133 voters, or 13%, were neutral in the near term.
The strong bullish sentiment comes as gold prices look to end the week around $1,950 an ounce, up more than 1% from last Friday. Analysts note that gold's gains come as 10-year yields pushed to 2.50%, its highest level in nearly three years.
Bond yields have been pushing higher since Tuesday after Fed Chair Jerome Powell signaled that the central bank could raise interest rates by 50 basis points in May. In his keynote address at the National Association for Business Economics Annual Economic Policy Conference, Powell also warned that inflation is too high.
Analysts have noted that although the Fed is looking to raise interest rates aggressively, it will still remain well behind the inflation curve; real rates will be negative, a positive environment for gold.
"Inflation hasn't gone away. We are now in a lull between central bank meetings with TNX and USD leveling off," said Colin Cieszynski, chief market strategist at SIA Wealth Management.
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Analysts also note that gold continues to see strong technical momentum. Darin Newsom. President of Darin Newsom Analysis said that he sees potential for gold prices to push to $1,991 an ounce in the near term.
"Newton's First Law of Motion applied to markets (A trending market will stay in that trend until acted upon by an outside force) tells us June gold could continue to trend up," he said.
However, not all analysts are optimistic that gold prices will be able to maintain their current momentum. Marc Chandler, managing director at Bannockburn Global Forex, said that rising bond yields could weigh on the precious metal.
"I expected higher yields in the U.S. and elsewhere to blunt the attractiveness of gold. Maybe it can re-test $1900-$1910," he said. "The war is the wild card."