Analysts lean bullish to neutral, retail investors see gains for gold in the final week of Q3
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(Kitco News) - Gold prices continued to trade in their well-established channel this week as markets saw the Federal Reserve leave rates unchanged on Wednesday, signaling that at least one more hike was likely in 2023 and that rates would need to remain higher for longer than previously anticipated.
The latest Kitco News Weekly Gold Survey shows market analysts divided between bullish and neutral, while retail investors expect an upside or downside break out of the recent trading range.
James Stanley, senior market strategist at Forex.com, sees potential for gold to rally next week. "Bulls put in a big showing this week considering what happened with both Treasuries and the US Dollar," Stanley said. "The low for this week was right around prior trendline resistance from the falling wedge. Bulls have an open door to make a move next week."
Colin Cieszynski, Chief Market Strategist at SIA Wealth Management, said he's neutral on the precious metal. "Gold has been trending sideways since the beginning of September and with most of the major market moving news for this month already out, Gold may continue to consolidate into the end of the quarter."
This week, 13 Wall Street analysts participated in the Kitco News Gold Survey. Six experts, or 46%, expected to see higher gold prices next week, while only two analysts, or 15%, predicted a drop in price. Five analysts, or 38%, were neutral on gold for the coming week.
Meanwhile, 591 votes were cast in online polls. Of these, 292 respondents, or 49%, looked for gold to rise next week. Another 208, or 35%, expected it would be lower, while 91 voters, or 15%, were neutral in the near term.
The latest survey shows that retail investors expect gold prices to trade around $1,936 per ounce next week, which is $12 higher than last week's prediction.
The coming week will see a raft of economic data releases, though nothing as impactful as this week's FOMC rate decision. Highlights will include U.S. GDP and PCE data for Q2 and August, the Dallas, Chicago, Michigan and Richmond Fed surveys, and August Durable Goods and Pending Home Sales.
Bob Haberkorn, Senior Commodities Broker at RJO Futures, thinks gold prices are going to remain range bound. "People are trying to digest the Fed," he said. "Are we on pause? And is that pause going to mean the rates stay where they're at for longer than expected? That seems to be the case. The market was pricing it at June that maybe they start doing some cuts, but now it's looking further out."
Haberkorn said that for the next week or so, he sees gold trading sideways to lower. "We'll be stuck in the range, might get some days like today where you catch a little bit of a dead cat bounce," he said. "But there's really not a lot of conviction behind this move today. I think it's going to be back and forth for the next week, sideways action."
Marc Chandler, Managing Director at Bannockburn Global Forex, also expects to see gold stay in its recent holding pattern for the near term.
"The yellow metal is finishing the week little changed, slightly firmer," Chandler said. "Although it had a slightly wider trading range this week (~$1913.98-$1947.47) in the cash market than the previous week, it was generally quiet. That may be reflecting contradictory forces."
He noted that the dollar was stronger, with the Dollar Index posting its tenth consecutive weekly gain. "US rates were mixed. 10-year slightly lower, 2-year slightly higher. For nearly a month, gold has been bouncing back and forth between $1900 and $1950. I look for this range to be maintained, barring a new shock for the next couple of weeks at least."
"Sadly, for both bull and bear, we are near the middle of that range," Chandler said.
Ben DiCostanzo, Senior Market Strategist at Walsh Trading, said gold is in a tough position. "Every rally gets sold off," he said. "We have a lot of strong resistances up ahead at $1961 in the December contract here, and markets have been failing the last few times."
He said that in the long term, "you've got to be bullish gold," but with interest rates remaining high, it will be tough for the precious metal to sustain rallies. "If we can get some kind of movement in the dollar you might be able to see a sustained rally, but as long as the dollar remains somewhat firm, I think it'll take a breakdown below par to really ignite gold to the upside."
"We're in a downtrend," DiCostanzo said. "The likelihood is that the market maintains its downtrend until it's able to take out resistance and hold above the resistance level."
Mark Leibovit, publisher of the VR Metals/Resource Letter, sees gold prices rising next week, and sees opportunities for other metals as well. "BULLISH regardless of the U.S. Dollar," he said. "Silver starting to show some relative strength."
Darin Newsom, Senior Market Analyst at Barchart.com, expects the yellow metal to maintain its sideways trajectory.
"The last week of the month could keep a lid on many markets," he said, noting that while Dec gold is in an intermediate-term uptrend on its weekly chart, the U.S. dollar index is in a long-term uptrend on its monthly chart. "If the dollar pulls back a bit to close out the month, it could spark a light round of buying in gold," Newsom said. "Funds are still holding a net-long futures position, not changing it much over the course of September, so with the end of the quarter in sight it could lead to some long-liquidation."
"The bottom line is I'm not getting a good read on next week's activity," he concluded.
Adrian Day, President of Adrian Day Asset Management, sees gold prices increasing in the near term. "Overreaction to Fed; inflation not over and economies heading to recession: good environment for gold," he said.
And Kitco Senior Analyst Jim Wyckoff continues to expect gold to remain rangebound with a downward tilt. "Steady-lower as charts remain near-term bearish," he said.
Gold prices are currently up 0.78% on the week, with spot gold last trading at $1,925.50 an ounce, up 0.28% on the day at the time of writing.