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Wall Street turns bearish on gold; sees support at $1,900 as markets focus on ceasefire talks, hawkish Fed

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(Kitco News) - Potential progress in ceasefire talks between Russia and Ukraine could reduce gold's safe-haven premium next week, according to some market analysts who see new bearish momentum in the marketplace.

The latest results from the weekly Kitco News Gold Survey show a majority of Wall Street analysts are now bearish on the precious metal. Meanwhile, although retail investors remain bullish on gold in the near-term, sentiment has dropped sharply from the previous week.

While analysts are looking for gold prices to fall next week, many note that the market is caught in a new consolidation pattern with initial support to hold between $1,880 and $1,900.

Sean Lusk, co-director of commercial hedging with Walsh Trading, said that although gold struggles to find new bullish momentum, he still sees lower prices as a long-term buying opportunity.

"Who wants to be short gold with everything going on," he said. "Investors should see any dip below $1,900 as a buying opportunity."

This week, 18 Wall Street analysts participated in Kitco News' gold survey. Among the participants, five analysts, or 28%, called for gold prices to rise next week. At the same time, ten analysts, or 56%, were bearish on gold in the near term, and three analysts, or 17%, were neutral on prices.

Meanwhile, 604 votes were cast in an online Main Street poll. Of these, 336 respondents, or 56%, looked for gold to rise next week. Another 170, or 28%, said lower, while 98 voters, or 16%, were neutral in the near term.

Kitco Gold Survey

Wall Street

Bullish
Bearish
Neutral

VS

Main Street

Bullish
Bearish
Neutral

Sentiment in gold has shifted significantly compared to the previous week - 71% of analysts and 72% of retail investors were expecting to see higher prices this past week. June gold futures are looking to end the week at around $1,923 an ounce, down 1.8% from last week. The market has fallen below an important psychological level at $1,925 an ounce.

Adrian Day, president of Adrian Day Asset Management, said he is bearish on gold next week as its safe-haven premium washes out of the marketplace. However, he added that the decline should be limited.

"Gold is not very far from its pre-war trend. Once the market focuses on the impossible choice of the Federal Reserve and ECB, then gold will resume its uptrend," he said.

Gold prices lost momentum last week after Russia and Ukraine started new peace talks in Istanbul, Turkey. According to reports, Ukraine proposed adopting a neutral status in exchange for security guarantees. At the same time, Russia has reduced its military operations near Kyiv and Chernihiv to focus its forces on the Donbas region.


Gold price has room to move higher, but there is better value in mining equities - Franklin Templeton

Along with shifting safe-haven sentiment, some analysts expect that the Federal Reserve's aggressive monetary policy stance could weigh on precious metals in the near term.

Marc Chandler, managing director at Bannockburn Global Forex, said that markets would be closely watching the minutes from Federal Reserve's March monetary policy meeting next week. And any hawkish tilt in the minutes could weigh on gold prices.

Chandler added that he could see gold testing support at around $1,900 an ounce.

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.