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(Kitco News) -As investors get ready to close the books on June, gold is seeing its worst monthly performance since February as prices look to end the week below $1,950 an ounce. The precious metal could continue to struggle as bearish sentiment asserts itself into the marketplace.
The latest Kitco News Weekly Gold Survey highlights a slightly bearish tilt to the market among both Wall Street analysts and Main Street retail investors. Some analysts have said that with the downward momentum in the marketplace, it could be only a matter of time before support is tested around $1,900 an ounce.
However, while gold appears to be headed lower in the near term, some analysts note that for tactical investors, now is the time to buy, to build a hedge against a potential downturn in equity markets and the growing threat of a recession.
Phillip Streible, chief market strategist at Blue Line Futures, said that he was disappointed with gold's price action this past week; however, he added that the selling is understandable after central banks worldwide have increased their hawkish stance on their respective monetary policies.
However, he added that traditionally, now remains the best time to buy gold and silver.
"You want to buy gold and silver when everyone hates it," he said. "A drop to $1,900 in gold and $20 in silver might be what's needed to bring new investors, new money to the market."
James Stanley, senior market strategist at Forex.com, said he was also disappointed with gold's price action as he was looking for prices to make a run back to $2,000 an ounce.
"There was an open door for bulls to push up to a test at 2k this week after the support bounce that posted around the European Central Bank rate decision. The fact that it didn't happen is yet another sign that bears are making more headway with re-taking control of intermediate-term price action," he said. "Over the past three years, gold has essentially been in a range and we're just now coming off of the resistance side of that formation."
Stanley added that persistently stubborn core inflation will force the Federal Reserve to maintain its hawkish bias, which creates a challenging environment for gold.
This week, 22 Wall Street analysts participated in the Kitco News Gold Survey. Among the participants, 11 analysts, or 50%, were bearish on gold in the near term. At the same time, nine analysts, or 41%, were bullish for next week and two analysts, or 9%, saw prices trading sideways.
Meanwhile, 966 votes were cast in online polls. Of these, 395 respondents, or 41%, looked for gold to rise next week. Another 403, or 42%, said it would be lower, while 168 voters, or 17%, were neutral in the near term.
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Bearish sentiment among retail investors is at its highest level since mid-February. At the same time, investors are paying more attention to the precious metal, with participation in this week's survey at its highest level since March.
Despite the bearish undertones in the market, there are still some analysts who are bullish on gold in the near term. Alex Kuptsikevich, senior market analyst at FxPro, said that while rising interest rates have made bonds more attractive than gold, the hawkish bias continues to pose risks for global financial markets.
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"The previous rise in gold prices was driven by regional bank crises, which have since faded from the spotlight, leading to some capital outflows from gold. However, this issue could resurface given the continued monetary tightening implemented since March," he said.
Kuptsikevich added that he is watching to see if gold prices can hold near-term support at $1,910 an ounce.
"If our assessment is correct and the bulls manage to push gold above the $1910 level, we could see a bullish recovery towards $1940 and potentially even reach the $2000 level by the end of July," he said.
