Gold prices are feeling bearish as bond yields and the US dollar rise. Rising bond yields and renewed strength of the US dollar are adding to investor apathy in the gold market, increasing the bearish sentiment among Wall Street analysts and retail investors, according to the results of the Kitco News Weekly Gold survey. Details cryptocoin.com‘in.
Gold prices survey
Sean Lusk, co-director of commercial hedging at Walsh Trading, said gold will remain stuck as there is a lack of confidence in the market. “We are optimistic about gold in the long term because US debt levels are getting out of hand, but it will continue to sell out in the short term,” Lusk said. Lusk added that gold prices must rise above $1,830 an ounce before they start attracting new investors. He also noted that with higher bond yields and the US dollar, gold continues to compete against record valuations in equity markets. “If gold is going to go up, we need to see some uncertainty in the equity markets,” Lusk said.
This week, 15 Wall Street analysts took part in Kitco News’ gold survey. The downward trend and the sense of neutrality garnered seven votes each. At the same time, one analyst was also bullish on gold. A total of 757 votes were cast in online polls. Of these, 339, or 45%, expect gold to rise next week. Another 294, or 39%, say lower, while 124 voters, or 16%, are neutral. Along with the low participation rate, the bullish sentiment among retail investors is at its lowest point since early March. The mood swing in the gold market comes as prices have dropped more than 2% this week. December gold futures were last traded at $1,752.30 an ounce. Gold prices saw a sharp sell-off on Thursday after stronger-than-expected economic data, including a 7% increase in US retail sales.
Fed monetary policy impact
For many analysts, the gold market faces some headwinds next week as the Federal Reserve holds its monetary policy meeting. There is growing uncertainty surrounding U.S. monetary policy as some economists indicate that recent economic data may support the Fed’s release of plans to cut its bond buying next week. However, some analysts also note that while they are bearish about gold, it could see a short rise if the US central bank delays these plans. Marc Chandler, managing director of Bannockburn Global Forex, said: “I expect gold to remain soft in the first half of next week. I see $1780 as resistance. Once the FOMC meeting is over, we may see some “hawkish Fed sell rumors” and gold may be bought.”
Colin Cieszynski, chief market strategist at SIA Wealth Management, said gold could rise further next week as the Fed delays contraction plans. Lusk noted that gold may seize an opportunity at the end of next week, but the Federal Reserve is still on the path of a tighter monetary policy and this may limit the gains of gold in the short term. Adrian Day, head of Asset Management, was the only voice raised in this week’s poll. He noted that the precious metal appears to have fallen excessively in the near term. “Gold is expected to rebound after the extraordinary drop over the past few days. Fundamentally nothing has changed.”
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