The record weekly close of gold prices creates a significant upward trend in the market. However, some analysts say that this breakout still needs to be tested. He also notes that investors should be careful about chasing gold prices.
Analysts are mostly bullish in gold survey
Last week, the Federal Reserve’s preferred inflation gauge showed a modest increase in consumer prices. Following this, gold prices managed to rise above $2,050 on Thursday. Kitco Weekly Gold Survey results show that both Wall Street analysts and retail investors are cautiously optimistic about gold this week. 14 analysts voted in the Gold Survey this week. None of the analysts are bearish on gold in the near term. 11 of the analysts (79%) evaluated gold as bullish. At the same time, three analysts (21%) remained neutral on the precious metal.
Meanwhile, Main Street investor sentiment continues to rise steadily. Participants cast 175 votes in the online survey. With a slight improvement from the previous week, 77 retail investors, representing 44%, expect gold to rise this week. 43 people, constituting 25% of the participants, predict that gold will fall. The remaining 31%, 55 respondents, remained neutral on the near-term prospects of the precious metal.
The rally showed gold’s potential, but…
cryptokoin.comAs you follow from , the rally brought a new breath to the precious metals market. However, some analysts say the price action remains sensitive. He also notes that it is possible for profit-taking and volatility to push prices back into their well-defined channels. Forexlive.com’s chief currency strategist Adam Button states that Friday’s rally shows how big potential gold has. However, he adds that he does not see the rally being supported by strong fundamentals. In this context, the analyst makes the following statement:
I don’t understand how a miss in ISM manufacturing could raise prices so much. If it came on the heels of truly disappointing employment numbers, I would be more convinced that this rally is sustainable. I think investors need to pay attention. Because this shows how many investors are waiting for the dollar to break before jumping into the market.
James Stanley not optimistic about beyond this level
James Stanley, senior market strategist at Forex.com, predicts higher prices in the near term. Despite this, he states that he does not follow the market either. Based on this, he makes the following statement:
I don’t think the pivot at the Fed is here yet. And even though I’ve been very bullish on gold over the last few weeks, spot prices trading above $2,075, even after the 2k test, is something I don’t want to chase here. This was the highest high in 2020 and has remained a significant hurdle for bulls in the three and a half years since. The NFP report will be a big event for macro next week, but that’s not until Friday, so there could be some tests near $2,100. But I’m not optimistic enough to move beyond this level to chase the move while it’s near long-term resistance.
According to Marc Chandler, critical resistance for gold: $ 2,088
Bannockburn Global Forex General Manager Marc Chandler says $2,088 will be an important resistance point for gold this week. Analsit explains the reason for this as follows:
Beyond that is the record high of $2,135.60 in early December. I think we will see a need for the dollar to break through resistance, which may require greater confidence in a near-term Fed cut. Some Wall Street economists have begun to back out of the cut, and former Treasury Secretary Summers has warned that the next move could still be an increase.
Gold rally or a bull trap?
Phillip Strieble, chief market strategist at Blue Line Futures, calls gold’s rally impressive. However, he says he would like to see gold hold higher support to confirm that this is not another bull trap.
Benefiting from the dynamics of the gold market!
Some analysts note that although gold has seen an impressive rally, it faces significant resistance at $2,100. Sean Lusk, co-director of commercial hedging at Walsh Trading, says he sees potential for gold to move higher. However, he states that he is hesitant to follow the market. “We have been consolidating for a while,” Lusk said. So it’s possible this has some teeth,” he says.
Lusk adds that investors can look at options to gain some exposure to gold and benefit from the market’s momentum. The analyst adds that a medium-term option is to buy a $2,100 August gold call option and sell a $2,275 February gold put option. “A modest 5% rally would take the market to $2,175,” the analyst said. “If the August 2,100 call trades at $70, I think we can collect $5,000 to $6,000 per spread at the exit.” says.
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