The gold market is poised to end the first half of 2023 far from where it started the year. The precious metal is facing tough winds. Therefore, the market mood indicates that prices will decline in the near term.
Gold faces a difficult environment
Among Wall Street analysts, bullish and bearish trends follow a balanced course. However, the Kitco Weekly Gold Survey shows that individual investors remain bearish. Christopher Vecchio, head of futures and forex at Tastytrade.com, says it’s not surprising that investors are turning away from gold as robust economic activity continues to bolster risk assets. He adds that with six-month money market funds offering returns of over 5%, investors are turning to risk-adjusted assets that perform better. In this context, Vecchio makes the following assessment:
You can be forgiven for underperforming in a bear market. But you can never be forgiven for underperforming in a bull market. There is a wall of anxiety in the market. But so far, none of these fears have come true. Therefore, investors feel more comfortable taking more risks.
cryptocoin.comAs you follow, gold prices seem to find support at $1,900. However, Vecchio says he sees any bounce as a short-term short-close. Because, he states that in this case, investors withdraw some profit from the table. In this direction, Vecchio said, “Your real returns are rising. Also, central banks keep interest rates high. In fact, it looks like it will stay higher for a long time. That’s why gold is facing a difficult environment,” he says.
“I would rather sell rally in this environment!”
Marc Chandler, managing director of Bannockburn Global Forex, says gold is bullish as a short-term change in momentum pushes prices up modestly. However, he adds that he prefers to sell rally in this environment. Chandler expresses his views on this issue as follows:
I expect a stronger dollar and higher US interest rates. There should still be a reasonably strong business report on July 7. Still, momentum indicators for gold seem to be bottoming out. Also, the potential hammer candlestick on June 29 indicates that a bounce may be coming. I can see a jump towards $1,920-30. But I would be more inclined to sell on ideas that underlying factors (US rates and the dollar) will reassert themselves.
Bulls and bears balance in gold survey
This week, 21 Wall Street analysts voted in the Kitco Gold Poll. Eight analysts (38%) voted up and down, respectively, among respondents. At the same time, five analysts (24%) stated that prices will remain flat.
Meanwhile, 845 participants voted in online polls. 314 of the respondents (37%) stated that gold will rise next week. Another 374 (44%) voted for prices to come down. The remaining 157 (19%) stated that they are neutral in the near term. However, retail investors’ average price target for the weekend is $1,941. This represents a modest gain compared to current prices.
This will damage the bottom
Adrian Day, head of Asset Management, also cast a cautious bullish vote. Day says gold prices will likely see limited gains next week. He explains, however, that he remains in a conflict between competing forces in the market. Accordingly, Day comments:
The gold market does not seem to have fully priced future rate hikes in the US and elsewhere. Therefore, while a near-term risk remains, large financing needs from earlier in the year before the US Treasury debt ceiling is raised will draw liquidity back. This will also damage the bottom.
Thisthey are yellow metal create downward pressure onleg
Gary Wagner, editor of TheGoldForecast.com, says improving economic conditions will continue to put pressure on gold. Wagner explains his views as follows:
A strong economy, low unemployment and rising yields will confirm to the Fed that the US economy can absorb further rate hikes. This will put downward pressure on gold. If the dollar stays strong, this will increase the pressure. The weakening of the dollar will do the opposite. But it won’t be enough to fuel a rally of any strength.
As a warning to the bearish game, Wagner states that gold prices will be supported by growing geopolitical turmoil. Last week, the world witnessed a failed military uprising in Russia. This provided little safe-haven demand for gold. Most bullish analysts noted that uncertainty and rising risks favor gold as a safe-haven asset.
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