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(Kitco News) – Bullish sentiment on gold has picked up, but there is still a lot of uncertainty surrounding the precious metal. Meanwhile, prices will be sensitive to economic headlines next week, some analysts say.
According to Kitco News’ latest gold poll, a majority of retail investors and Wall Street analysts turned bullish for gold next week as the price managed to solidly exceed $ 1,800 per ounce. Federal Reserve Chairman Jerome Powell presented no clear plan for the US central bank to scale back its bond buying program during his much-anticipated Jackson Hole speech.
Powell said he saw the potential for the Federal Reserve to cut back on purchases this year; however, he also noted that there is still some uncertainty regarding the COVID-19 pandemic and the spread of the Delta variant.
“My view is that the ‘substantial further progress’ test has been met for inflation. There has also been clear progress towards maximum employment. Developed broadly as expected, it may be appropriate to start reducing the pace of asset purchases this year. The intervening month brought more progress in the form of a strong employment report for July, but also the further spread of the Delta variant, ”said Powell said in his prepared remarks.“ We will carefully assess the results. incoming data and changing risks. Even after the end of our asset purchases, our high holdings of long-term securities will continue to support accommodative financial conditions. ”
Analysts said Powell’s comments were more on the dovish side, creating some selling pressure on the US dollar, which was positive for gold.
According to the latest Kitco News poll results, a majority of analysts expect Friday’s momentum to continue until next week.
This week, 16 Wall Street analysts took part in the Kitco News gold survey. Of the participants, nine, or 56%, called for a rise in gold prices. At the same time, four analysts, or 25%, called for a drop in gold prices next week. Three analysts, or 19%, were neutral on gold in the short term.
Meanwhile, a total of 801 votes were cast in Main Street’s online polls. Of these, 398 respondents, or 50%, expected gold to rise next week. Another 243, or 30%, said lower, while 180 voters, or 20%, were neutral.
Last week there was no clear direction from Wall Street analysts or Main Street investors. Sentiment in the gold market was at its lowest since the start of the year. However, Powell’s comments breathed new life into the market. December gold futures last traded at $ 1,817 an ounce, up almost 2% from last week.
Gold prices are trading near their highest level in three weeks and have fully recovered from its recent flash crash.
According to some analysts, Powell’s latest comments show that there is still a lot of uncertainty around US monetary policy.
“Powell didn’t say anything we didn’t expect, although the market can be relieved that higher interest rates are still at some point in the future, despite higher inflation. ‘Huge increase in bond purchases this month, the Fed has plenty of opportunity to “start cutting” its purchases without hurting the Fed’s balance sheet, “said Adrian Day, chairman of Adrian Day Asset Management. Day said he was bullish on gold for next week.
John Feneck, founder of Feneck Consulting, said he also thinks it’s clear monetary policy isn’t going to tighten anytime soon. He added that with gold he was buying down the precious metal mining sector.
“Total employment is still below 6 million jobs compared to February 2020 levels,” he said. “We think ‘tapering’ is not ‘tightening’, and we are buying this decline in mining stocks. ”
Adam Button, head of currency strategy at Forexlive.com, said he sees more potential for gold as the US dollar remains under pressure following Powell’s comments.
While most analysts are looking for higher prices next week, there is some uncertainty surrounding the bullish momentum in the market.
Phillip Streible, chief market strategist at Blue Line Futures, said that while he expects to see higher prices next week, any rally could be a selling opportunity ahead of the nonfarm payroll figures. Friday.
He added that good jobs numbers could push gold prices back to their recent lows.
“I don’t think investors missed the plunge to take on gold,” he said. “Gold will be scared by economic data over the next few weeks,” he said.
Marc Chandler, managing director of Bannockburn Global Forex, said the gold market appears to be ahead ahead of Friday’s jobs report.
“I would look for a further rebound to sell gold early next week on follow-up buys in the 1820-1830 area,” he said.
Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes. It is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.
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