Gold is keeping its head above water and sentiment is improving but its a boring market
(Kitco News) - Retail investors are becoming a lot more excited about gold, and paying more attention to the precious metal as the Federal Reserve looks to slow the pace of rate hikes next month and into 2023.
However, Wall Street analysts are not convinced that gold is ready to break out, with many looking for prices to trade sideways in the near term, according to the latest Kitco News Weekly Gold Survey.
Bob Haberkorn, senior market strategist at RJO Futures, said that while there is growing interest in gold, he expects prices to tread water around current levels as a new catalyst is needed to push prices back above $1,800 an ounce.
"Everyone is focused on the Fed and how high interest rates are going," he said. "I think gold will remain fairly sideways until that Fed decision. I think gold will be a boring market until then."
This week, 16 Wall Street analysts participated in the Kitco News Gold Survey. Among the participants, seven analysts, or 44%, were neutral on gold in the near term. At the same time, six analysts, or 38%, were bullish for next week, and three analysts, or 19%, were bearish on prices.
Meanwhile, 1,054 votes were cast in an online Main Street poll. Of these, 667 respondents, or 63%, looked for gold to rise next week. Another 253, or 24%, said it would be lower, while 134 voters, or 13%, were neutral in the near term.
Not only are retail investors extremely bullish on gold, but participation in this week's survey jumped to its highest level since late September.
The mixed outlook for gold comes as prices look to end the shortened trading week in neutral territory at $1,750 an ounce.
Along with the Federal Reserve's monetary policy, some analysts have said that they are currently sitting on the fence watching to see how U.S. dollar flows will impact gold prices. Analysts note that the U.S. dollar index is trading at a critical pivot point around 106 points, and further weakness would be positive for gold.
Colin Cieszynski, chief market strategist at SIA Wealth Management, said that he remains bullish on gold as he expects the U.S. dollar to have peaked.
"Gold appears to have turned a corner with U.S. treasury yields and the U.S. dollar backing off, enabling its role as a store of value in turbulent times to come back to the forefront," he said.
However, other analysts are not convinced that the U.S. dollar is headed lower, especially as the expectations remain firmly in place for the Federal Reserve to push interest rates above 5% early next year.
"I am looking for higher rates and a stronger dollar to allow gold in the cash market to test $1720-$1730," said Marc Chandler, managing director at Bannockburn Global Forex. "The momentum indicators are still pointing south and I suspect we have only seen the first leg down. After a small bounce, gold is now ready for the next leg lower."
Adrian Day, president of Adrian Day Asset Management, said that some consolidation in gold would be healthy after the solid gains the precious metal has seen since the start of the month.
"Gold needs to rest," he said. "Absent a new development, gold will likely be relatively unchanged next week. As we get closer to the next Federal Reserve and European Central Bank meetings in mid-December, the market will be looking for signs of a slowdown or even pause in tightening and that will boost gold again."