(Kitco News) - Gold prices could remain in neutral territory in the near term, unable to push to $2,000 an ounce as the marketplace sees lackluster bullish sentiment.
The Kitco News weekly gold survey shows little conviction in gold among both Wall Street analysts and Main Street retail investors as the market continues to digest the Federal Reserve's latest monetary policy decision after leaving interest rates unchanged but signaling potential two more rate hikes later this year.
While gold prices are ending the week in neutral territory, bouncing from a three-month low following the Fed decision, analysts are not expecting to see any significant price action in the near term.
Ole Hansen, head of commodity strategy at Saxo Bank, said that gold's bounce ahead of the weekend shows there is a solid bid in gold; however, he added that the precious metal lacks the spark to trigger a more significant rally.
"I think we need to get back above $1,985ish before some bullish conviction returns to gold," he said. "Right now, gold is supported as markets show some disbelief in the Fed's dot plots as the yield curve continues to highlight the threat of a recession. But we just don't have a trigger for a bigger rally to $2,000."
Darin Newsom, senior market analyst at Barchart, reminded investors that sideways is still a technical direction.
"The daily chart for August gold is showing a generally sideways pattern, if we discount Thursday's spike low. Given this, I would expect the contract to stay between the recent high of $1,986 and low of $1,953 and wait for a clear breakout," he said.
This week, 24 Wall Street analysts participated in the Kitco News Gold Survey. Among the participants, ten analysts, or 42%, were bullish on gold in the near term. At the same time, five analysts, or 21%, were bearish for next week, and nine analysts, or 38%, saw prices trading sideways.
Meanwhile, 487 votes were cast in online polls. Of these, 258 respondents, or 52%, looked for gold to rise next week. Another 126, or 26%, said it would be lower, while 103 voters, or 21%, were neutral in the near term.
Wall Street
42%
21%VS
Main Street
52%26%While retail investors are still bullish on gold next week, sentiment has dropped to its lowest point since May. Retail investors also see limited gains for gold, with prices expected to end the week around $1982 an ounce.
Gold prices are looking to end Friday around $1,967 an ounce, down 0.5% from last week's close.
Although most analysts remain cautiously optimistic, some see the bounce off of support around $1,930 an ounce as a strong bullish signal.
Michele Schneider, director of trading education and research at MarketGauge, said she is bullish on gold as inflation remains a threat.
"After the bears came out and gold briefly tested below 1950 (low around 1930) and held, we see higher prices," she said. "Droughts are impacting food prices; sugar is consolidating near highs. Gold could finally clear $1980, then $2000."
James Stanley, senior market strategist at Forex.com, said he still sees a path higher for gold.
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"I think we'll see another test above 2k in [August gold futures]. That support response to $1936 around FOMC was intense and still hasn't shown signs of abating. There's a lot of overhead supply, so there is some resistance to work through, but I think there's a chance that we test back above the 2k handle next week," he said.
"The bigger question is whether bulls show up to bid [above] 2k, and I think that's possible, too, given how aggressively markets are working the Fed pause theme," he added. "But we're going to get a lot of Fedspeak, so that's something that can quickly change."
On the bearish side, while most analysts still see gold in a long-term uptrend, it could see some short-term selling as the Federal Reserve maintains its aggressively hawkish monetary policy stance.
Naeem Aslam, chief investment officer at Zaye Capital Markets, also said he is bearish on gold as bearish technical momentum appears to be building.
