As investors prepare to close the month of June, gold prices finished the week below $1,950. Thus, gold exhibits its worst monthly performance since February. The precious metal will likely continue to struggle as the bearish trend emerges in the market.
When everyone hates you want to buy gold and silver!
The latest Kitco Weekly Gold Survey highlights a slight bearish bias to the market among both Wall Street analysts and Main Street retail investors. Some analysts say that with the bearish momentum in the market, it is only a matter of time before the support near $1,900 is tested. However, while gold looks set to decline in the near term, some analysts say now is the time to buy for tactical investors to guard against a possible downturn in the stock markets and the growing threat of a recession.
Phillip Streible, chief market strategist at Blue Line Futures, says he’s disappointed with gold’s price action over the past week. However, he points out that central banks around the world have stepped up their hawkish stance on their own monetary policies. He adds that after these developments, the sale is understandable. However, he traditionally states that now is the best time to buy gold and silver. In this context, Streible comments:
You want to buy gold and silver when everyone hates it. A drop to $1,900 in gold and $20 in silver could be just what it takes to bring new investors and new money into the market.
This will create a challenging environment for shiny metal.
James Stanley, senior market strategist at Forex.com, expects prices to return to $2,000. That’s why he says he’s also disappointed with the price action of gold. Based on this, Stanley makes the following assessment:
Following the jump in support following the ECB rate decision, there was an open door for the bulls to test the $2,000 level this week. The fact that this has not happened is another sign that the bears are making further progress, regaining control of their medium-term price action. For the past three years, gold has essentially been in a range. We are currently exiting the resistance side of this formation.
Stubborn core inflation will force the Federal Reserve to continue its hawkish trend, Stanley says. He adds that this will create a challenging environment for gold.
Weekly gold survey is expected to decline
22 Wall Street analysts voted in the Kitco Gold Poll this week. Among the participants, 11 analysts (50%) expressed a bearish view on gold in the near term. At the same time, nine analysts (41%) were bullish for the next week. Two analysts (9%) stated that prices will follow a horizontal course.
Meanwhile, respondents in online polls cast 966 votes. 395 (41%) of respondents predict that gold will rise next week. Another 403 people (42%) say prices will fall, while 168 people (17%) say they are neutral in the near term. The bearish trend among retail investors is at its highest level since mid-February. At the same time, investors are showing more interest in the precious metal. Participation in this week’s survey is at its highest level since March.
A $2,000 level is possible until the end of July!
Despite the bearish trend in the market, some analysts are still bullish for gold in the near term. Alex Kuptsikevich, senior market analyst at FxPro, says rising interest rates are making bonds more attractive than gold. However, he also notes that the hawkish trend continues to pose risks to global financial markets. In this context, Kuptsikevich makes the following statement:
The previous rise in gold prices was due to regional banking crises that have since fallen off the agenda and have led to some capital outflows from gold. However, this issue may come up again due to the continuation of the monetary tightening implemented since March.
Kuptsikevich says he watches to see if gold prices can hold the short-term support at $1,910. “If our assessment is correct and the bulls manage to push gold above the $1910 level, it is possible that we could see a rise towards 1940 dollars. It is even possible that we will reach the level of $ 2,000 by the end of July.”
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