Gold sentiment is solidly bullish as prices end the week above $1,900
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(Kitco News) - Gold prices are looking to end the first full trading week of 2023 at an eight-month high. While the precious metal could be considered overbought, sentiment in the marketplace points to higher prices in the near term.
Kitco News' first Weekly Gold Survey of 2023 shows sentiment among both Wall Street analysts and Main Street investors is solidly bullish, with many analysts suggesting that it's only a matter of time before the $2,000-an-ounce target is reached.
"There is a gravitational pull to $2,000 and will only build as prices continue to move higher," said Phillip Streible, chief market strategist at Blue Line Futures.
While momentum favors higher prices, analysts are warning investors not to chase the market.
"Gold prices will be going higher, but I am willing to wait and be patient for a pullback," Streible said. "In the short-term, I think to look to buy the dips."
Daniel Pavilonis, senior commodities broker with RJO Futures, said that he is also bullish on gold but recommends investors don't buy at current levels.
"If you are on the sidelines and not in the gold market, then I would wait for a pullback," he said. "If you are long, now might be a good time to take some profits and then look to get back in on a pullback."
This week, 18 Wall Street analysts participated in the Kitco News Gold Survey. Among the participants, 11 analysts, or 61%, were bullish on gold in the near term. At the same time, three analysts, or 17%, were bearish for next week and four analysts, or 22%, saw prices trading sideways.
Meanwhile, 825 votes were cast in online polls. Of these, 524 respondents, or 64%, looked for gold to rise next week. Another 190, or 23%, said it would be lower, while 111 voters, or 13%, were neutral in the near term.
Some analysts said that shifting expectations regarding the Federal Reserve's aggressive monetary policy stance remains the biggest bullish factor for gold. These analysts have said that cooling inflation pressures have given the Federal Reserve room to further slow the pace of their rate hikes next month, causing bond yields and the U.S. dollar to reverse some of last year's massive uptrend.
Kevin Grady, president of Phoenix Futures and Options, said that the momentum in the U.S. dollar is turning bearish as market expectations shift. He added that although gold could be reaching over-stretched levels, it could still have some room to move higher.
"I have been waiting for a fundamental change in the marketplace and I think we are starting to see that,” Grady said. “The bond market is signaling that interest rates will be lower than what the Fed is saying and that is bullish for gold."
Adrian Day, president of Adrian Day Asset Management, said he is also bullish on gold in the near term as the market signals the Federal Reserve is nearing the end of its tightening cycle.
"Any news that supports that thesis, just as last week's U.S. CPI report showing inflation coming down, helps push gold higher. Any pushback from the Federal Reserve would hurt gold, but we have not seen that yet," he said.
However, not all analysts are convinced that gold can maintain its current momentum. Ole Hansen, head of commodity strategy at Saxo Bank, said that while he remains a long-term bull on gold, there are growing risks of prices consolidating at current levels.
Meanwhile, Colin Cieszynski, chief market strategist at SIA Wealth Management, said he is neutral on gold in the near term.
"Gold has had a nice run lately but is getting a bit overbought technically and due for a rest," he said.