Wall Street turns bearish on gold price, warns of volatility ahead of Jackson Hole
Gold folded under pressure from the greenback on Friday as the U.S. dollar index climbed to 20-year highs. December Comex gold futures were last trading at $1,763.10, down 3% on the week.
Markets remain focused on any Federal Reserve speakers after the FOMC meeting minutes from July showed that Fed officials agree on the need to eventually slow down their tightening cycle. Still, they first need to see how their rate hikes impact inflation.
All eyes next week are on Fed Chair Jerome Powell's 'Economic Outlook' speech at the 2022 Jackson Hole Economic Policy Symposium, which is scheduled for Friday morning.
"All eyes are on Jackson Hole symposium. Powell's remarks for next week are one of the key avenues that the Fed could use against the market starting to price in a rate cut cycle next year following this year's tightening. We think market expectations are inconsistent with the Fed's inflation targeting mandate. Expect rates to remain elevated and sap the interest out of precious metals," TD Securities commodity strategist Daniel Ghali told Kitco News.
Kitco's weekly gold survey results revealed that Wall Street is now bearish on gold prices next week. Out of 11 analysts participating in the survey, 55% expect prices to fall, 27% are neutral, and only 18% are calling for prices to move higher.
The Main Street side remained bullish for next week. Out of 709 retail participants, 46% projected higher prices, 35% called for a move lower, and 19% were neutral, Kitco's survey showed.
The technical picture remains bearish in the near term, Kitco's senior analyst Jim Wyckoff said.
"Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,725.00. First resistance is seen at the overnight high of $1,762.70 and then at Thursday's high of $1,775.90," Wyckoff said.
This week's drop below the $1,800 an ounce level has put the bulls on hold, Moor Analytics founder Michael Moor told Kitco News.
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"Trade above $1,786.3-8.3 will warn of strength," Moor added. "A maintained gap lower Monday leave a fairly sizable bearish reversal above that will warn of pressure for days/weeks."
Selling the rallies would be one approach to the gold trade at the moment, according to Alliance Financial precious metals dealer Frank McGee, who is projecting lower prices next week.
"[Gold] can't fight a higher interest rate environment as the Fed's rate increases, and QT start to take hold," McGee said.