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(Kitco News) – Gold is once again on the razor’s edge as prices end the week below $1,650 an ounce, and the muddled market sentiment is unlikely to provide a clear direction for the precious metal next week.
Kitco News’ latest gold survey shows bullish analysts and retail investors have a slight edge; However, there is no prevailing belief in the market.
According to some analysts, many investors remain on the sidelines, waiting for a clear indication that the Federal Reserve will slow the pace of its aggressive rate hikes through the end of the year. The Federal Reserve’s Nov. 2 monetary policy meeting will be the driving force behind next week’s gold prices, analysts say.
For most of the summer, investors were nonstop burned after chasing rumors that the Federal Reserve was about to turn. Sean Lusk, co-director of commercial hedging at Walsh Trading, said he expects current market expectations to fade, similar to other market rumors. Lusk said he expects lower gold prices next week.
“Until we get clarity from the Federal Reserve, gold rallies will continue to be sold,” he said. “I don’t think we’re going to get much clarity from the Fed next week. There is a cost associated with printing money over the past two years, and we should expect the costs to be felt for longer than most anticipate.”
Lusk added that he will closely monitor the $1,620 area. A break down would trigger a very bearish signal.
Kitco’s weekly gold poll results showed that Wall Street has a mildly bullish bias on gold prices next week. Out of 17 analysts who took part in the survey, seven analysts or 41% expect prices to rise next week. Meanwhile, six analysts or 35% were bearish in the near term and four analysts or 24% were neutral on gold.
The mood on Main Street was relatively similar. This week, 473 respondents took part in online surveys. A total of 200 voters or 43% called for the price of gold to rise. Another 169 or 37% predicted gold would fall. The remaining 94 voters, or 20%, called for a sideways market.
Phillip Streible, chief market strategist at Blue Line Futures, said he remains neutral on gold in the near term as Federal Reserve rate hikes will continue to weigh on the precious metal.
“Nothing is stopping gold from falling below $1,600 an ounce in the short term and that’s not a bold statement,” he said. “However, if gold falls, I would look to buy small positions. I would try to buy silver when the price falls below $18 an ounce.
For most optimistic analysts, growing expectations that the Fed will slow rate hikes from December will provide support for prices in a volatile environment.
“Technically, it looks like gold is slowly turning the corner. Gold appears to be volatile ahead of next Wednesday’s Fed decision, which could potentially impact the US dollar’s trend depending on whether the Fed is more hawkish or dovish than expected and relative to other central banks,” said Colin Cieszynski, Chief Market Strategist at SIA Wealth Management.
Darin Newsom, President of Darin Newsom Analysis, also expects some volatility next week. However, he added that gold will be in an uptrend over the medium term as long as it sustains above its recent lows of around $1,620 an ounce.
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