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(Kitco News) – A strong start to December as prices end the week above $1,800 and near their highest level in more than three months is creating significant bullish sentiment in the market; however, the question remains whether sentiment will be enough to push investors out of the margins.
The latest weekly gold survey from Kitco News shows that Wall Street analysts and Main Street retail investors are distinctly bullish on gold in the near term as the market sees strong bullish technical momentum.
Gold’s rally began on Wednesday when Federal Reserve Chairman Jerome Powell said it might be appropriate for the US central bank to ease its pace of tightening in December.
At the same time, analysts also said growing recession fears were also giving gold a further boost.
Colin Cieszynski, chief market strategist at SIA Wealth Management, said he remains bullish on gold even as rising interest rates continue to support the US dollar.
“Investors are starting to realize that gold is still an important defensive asset,” he said. “It continues to play its role as a store of value.”
Adam Button, head of currency strategy at Forexlive.com, said gold is also benefiting from positive seasonal factors as demand picks up ahead of the holidays.
“The seasonal December gold buying trend kicked in on the first day of the month. With the Fed tilting and the US Dollar falling, the stars are aligned for gold,” he said. -he declares.
This week, 18 Wall Street analysts took part in the Kitco News Gold Survey. Of the participants, 12 analysts, or 67%, were bullish on gold in the short term and six analysts, or 33%, were bearish for the next week. There were no neutral votes in this week’s survey.
Meanwhile, 1,018 votes were cast in a Main Street online poll. Of these, 715 respondents, or 70%, expected gold to rise next week. Another 188, or 18%, said it would be lower, while 115 voters, or 11%, were short-term neutral.
The decidedly bullish outlook comes as gold prices appear to end the week with a 2% gain, with February gold futures last trading at $1,809 an ounce. Even a stronger than expected November jobs report with strong wage growth was not enough to dampen gold’s new momentum.
On Friday, the Bureau of Labor Statistics said 263,000 jobs were added in November; economists had expected job gains of 200,000. Meanwhile, wages rose 5.1% on the year, well above expectations.
Darin Newsom, senior market analyst at Barchart, said next week could be an exciting one for the precious metal as the current rally could be seen as a technical top; however, he added that the momentum is clearly on the bullish side.
“It’s markets like gold that cause technical analysts trouble drinking,” he said. “Given that the weekly stochastic hasn’t clearly broken above the 80% overbought level, February gold appears to have the time and space to rise next week. However, and this is where things stand. become fun, its target zone is between $1,807.20 (with this week’s high already $1,818.70) and $1,861.20.”
However, not all analysts are bullish on gold, at least in the short term. Adrian Day, President of Adrian Day Asset Management, said that while he remains a long-term gold bull, he sees gold prices falling next week.
“We will likely see some follow-up to the decline in the latest US jobs report, which showed more new jobs than expected, as well as a natural correction to a strong weekly recovery,” he said. declared. “But after that, a rally, as more and more market participants realize that the Federal Reserve (and other central banks, especially the ECB and the BoE) will simply be unable to meet their inflation targets without causing a severe recession. Signs of imminent threat recession is building up.”
Marc Chandler, managing director of Bannockburn Global Forex, said he is bearish on gold next week as markets are overly bullish on Powell’s supposedly dovish stance.
He added that the rise in wages in the November jobs report shows that the Federal Reserve still has to deal with a problem of rising inflation.
“Gold then looks likely to reject the false break above the 200-day moving average. I’m looking for $1765 and maybe $1750 ahead of the FOMC meeting mid-month,” 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 only. This is not a solicitation to trade commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for loss and/or damage resulting from the use of this publication.
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