Volatility to dominate gold market as 'central banks running out of options,' bullish sentiment intact - Kitco's gold price survey
(Kitco News) - Despite a $20 retreat prior to the long weekend, the bullish sentiment continues to dominate the gold market with volatility keeping investors watching the $2,000 an ounce level again, according to Kitco's gold price survey.
During the short trading week, gold was able to breach a key resistance level of $1,975 an ounce, with June Comex gold futures touching a high of $1,985 on Wednesday. And even though prices saw a drop Thursday, gold futures are ending the week up 1.2%.
Most of the 13 participating analysts on the Wall Street side were bullish when asked about their gold price expectations for next week, with 46% projecting higher levels. Another 31% were bearish, estimating a bigger pullback. And the remaining 23% were neutral.
The Main Street side was even more decisively bullish. Out of the 1,254 participating retail investors, 72% expect higher prices, 16% estimate a move lower, and 12% are neutral, Kitco's survey showed. This was the highest retail participation since November 19.
Many analysts pointed to technical progress gold made after moving past the $1,980 an ounce level, stating this was a sign of strong interest in the metal, which will continue to push prices higher.
"There is a growing belief in a long-term commodity rally along with the weakening of all major currencies. If gold can push through $2,000, it will invalidate the double top and leave it with unlimited room to run," Forexlive.com chief currency strategist Adam Button told Kitco News.
Gold has broken above multiple formations, which contributes to the bullish sentiment, said Moor Analytics creator Michael Moor.
However, with Good Friday and Easter holidays coming up, some are expecting trading to be thin due to the shortened week.
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"I am neutral on gold for the coming week. Technically it's in an upswing, but with so many holidays over the next few days, trading could be quiet in general, and it could be time for a pause with the price near the big $2,000/oz round number," said SIA Wealth Management chief market strategist Colin Cieszynski.
The bearish camp leaned towards a pullback next week as investors look to take profits after solid gains. However, even those who expect lower prices in the short term are confident that the overall macro environment supports higher prices going forward.
One long-term driver remains the global central banks, which are being backed into a corner by high inflation, said Adrian Day Asset Management president Adrian Day.
"We may see a pullback next week, but only shallow and 'transitory' before gold moves up again in response to higher inflation, central banks running out of options, and a deteriorating situation in Ukraine," he told Kitco News. "The higher U.S. inflation number makes some investors think that the Fed will actually tighten in a meaningful way. But in fact, it will make the eventual retreat by the Fed all the more bullish for gold. So we certainly would not be selling, but looking to add."