The gold market continues to hold critical support levels above $1,700 an ounce while struggling to attract consistent bullish sentiment among both Wall Street analysts and retail investors, according to the latest Kitco News Weekly Gold Survey.
The latest survey results show that bullish and bearish sentiments are relatively balanced in the gold market as the price has been unable to push above critical resistance at $1,750 an ounce.
Among Wall Street analysts, bearish sentiment has a slight edge; however, many analysts think that a price drop in the current environment could be a long-term buying opportunity.
“I think we could see a washout to $1,700, but then investors are going to jump into the market,” said Phillip Streible, chief market strategist at Blue Line Futures. “Bond yields can’t go higher forever, and once the trend reverses, gold will do well.”
This week 16 Wall Street analysts participated in Kitco News’ gold survey. Among the participants, 7, or 44%, called for gold prices to rise; eight analysts, or 50%, said they expect to see lower prices, and one vote, or 6%, was neutral on the precious metal.
Meanwhile, A total of 807 votes were cast in online Main Street polls. Of these, 377 respondents, or 47%, looked for gold to rise next week. Another 255, or 32%, said lower, while 175 voters, or 22%, were neutral.
Although retail investors have maintained a slight bullish advantage, interest in the low-volatile gold market is waning as participation in this week’s survey dropped back down to its lowest level since early-May 2020.
This week’s relatively neutral outlook comes as gold prices end the week with a 0.5% loss. June gold futures last traded at $1,735 an ounce.
With the gold market trading in a fairly narrow range between $1,700 an ounce and $1,750, analysts say that there are bullish and bearish cases for the precious metal. For many, the price action hinges on what happens with the U.S. dollar and bond yields that continue to hold near a more than one-year high.
“The encouraging developments on the vaccine front in the U.S. have fuelled hopes for a faster U.S. economic recovery, consequently boosting appetite for the Greenback. Should the Dollar extend gains in the week ahead, this is likely to drag Gold prices lower,” said Lukman Otunuga, senior research analyst at FXTM.
“At this point, the technicals favor bears with a weekly close below $1,730 sealing the deal for a decline towards $1,700 and lower,” he added.
Adam Button, head of currency strategy at Forexlive.com, said that he is also watching resilient strength in the U.S. dollar.
“I don’t think it’s quite the time to wade back into gold. The U.S. dollar is showing many positive signs, and that could be a significant headwind,” he said.
Jim Wyckoff, senior technical analyst at Kitco.com, was the lone neutral vote in this week’s survey. Although he sees the market caught in a sideways trading pattern, he added that bearish traders have a slight advantage in the near-term.
However, not everyone is negative on the gold market, and many continue to see long-term support and current levels could represent an attractive entry point.
Charlie Nedoss, senior market strategist with LaSalle Futures Group, said that he remains bullish as long as gold prices hold above the 20-day moving average, which comes in around $1,725 an ounce.
“If we can hold the 20-day, then I think we can see a run higher above $1,750,” he said.
Nedoss said that there are indications that the U.S. dollar and bond yields could have peaked in the near-term.
Daniel Pavilonis, senior market strategist at RJO Futures, said that he is bullish on gold in the near-term as bearish sentiment looks to shift.
“Market sentiment is low compared to where it was back in August. It’s probably a good time to start picking up gold,” he said.