There are gold bulls on the driver’s seat; The market is expecting the price to sustain around $2,000.
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(Kitco News) – Sentiment shows gold bulls are in total control of the market as the global banking crisis escalates and the Federal Reserve is unable to raise interest rates further, according to the latest Kitco News Gold Survey.
Both Wall Street analysts and retail investors are bullish on gold as prices appear to be flirting with $2,000 an ounce at the end of the week. April gold futures were last trading at $1,992 an ounce, about 1% higher than last week’s settlement price.
While most analysts expect prices to rise in the near term, some are warning investors to exercise caution at these levels.
Sean Lusk, co-director of commercial hedging at Walsh Trading, said he is bullish in the near-term, but also noted that $2,008 represents a 10% gain for the year, which could attract some profit-taking. Could
“Gold has topped this level,” he added. “But you also have to look at why we are up here. We have a banking transition that continues to escalate and we don’t know when it will end. There is not a lot of confidence in the equity markets in this environment and people are Looking for places to put money. There are solid reasons why gold can cross the 10% mark.”
Lusk said that even if prices drop, he still expects purchases to be made.
Lukman Otunuga, manager of market analysis at FXTM, highlighted a similar sentiment, adding that gold bulls are currently “in the driving seat and could shift into a higher gear once they conquer the $2000 resistance”. “
However, he also pointed out that the $2,000 level is proving to be a tough resistance point.
“This could lead the precious metal to drop to $1955 and $1935 before bulls re-enter the market. Should $2000 be lost, it could open doors to March 2022 peak at $2070,” he added. ,” They said.
This week, 20 Wall Street analysts participated in the KITCO News Gold Survey. Among participants, 13 analysts, or 65%, were bullish on gold in the near term. At the same time, five analysts, or 25%, were bearish for the week ahead, and two analysts, or 10%, saw prices trading sideways.
There, 896 votes were cast in the online poll. Of these, 639 respondents or 71% expected gold to rise next week. Another 152, or 17%, said it would be less, while 105 voters, or 12%, were neutral in the near term.
Sentiment in the gold market among retail investors is at the highest level in more than a year. Also, this week’s poll participation reached its highest level since the beginning of the year, indicating growing interest in the market.
The survey also suggests that retail investors are eyeing gold prices to sustain above $2,000 an ounce till the end of next week. Digging deeper into the results, 18% of respondents see gold prices falling below $1,950 an ounce; A 10% decline sees price testing support at $1,900.
Adrian Day, president of Adrian Day Asset Management, said he is bullish on gold as he expects the Federal Reserve’s 25 basis point hike on Wednesday to prove to be its last. He added that it would be impossible for the central bank to continue raising interest rates in the current environment.
“The three US bank failures, plus Credit Suisse, have clearly demonstrated that one cannot raise interest rates so aggressively from zero without breaking something. It would be presumptuous to assume that these four banks are the only financial institutions ” The edge The response from the Fed and the Swiss National Bank clearly shows that, when push comes to shove, central banks are going to do what central banks always do, that is, throw money at the problem. Thus, the Fed is preparing to pause before inflation is defeated and the economy plunges into recession amid a fragile financial system. This is extraordinarily bullish for gold,” he said.
However, not all analysts are bullish on gold. Some analysts have said that any easing of the banking crisis could trigger a strong selloff in gold.
Mark Chandler, managing director of Bannockburn Global Forex, said the gold market faces some strong technical headwinds.
“Gold needs to rise to near $2010 high of March 20 to sustain momentum. I am cautious. Slowing stochastic is flagging, and I suspect market will see no more than 100bp cut this year. Next week’s PCE deflator report is expected to show a flat core rate and a slight decline in the headline rate, leaving both at higher levels,” he said.
Darrin Newsom, senior market analyst at Barchart.com, said he also sees a slowing trend in the gold market. He noted that he is turning bearish on gold for a couple of weeks.
“I’m either stubborn or stupid, and have called equal numbers of both over the years,” he said. I still view the June contract as top out, this time at Monday’s high of $2,031.70, ” They said. “In other news, the US Dollar Index is working on rolling into a short-term uptrend on its daily chart, while the Fed funds futures forward curve is signaling a rate cut in June. Fun times ahead.”
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