As the trading week concludes, the gold market is displaying modest gains, ending a three-week losing streak. Despite being off its highs, solid bullish sentiment in the marketplace could steer prices back to the $2,000 an ounce mark by next week.
Bullish Sentiment in Gold
The most recent Kitco News Weekly Gold Survey indicates both Wall Street analysts and Main Street investors are firmly bullish on gold in the short term. This broad-based bullish sentiment emerges despite the precious metal experiencing some selling pressure following the U.S. Labor Department’s release of strong employment data.
The Labor Department reported that 339,000 jobs were created last month, an announcement that resulted in a bullish push for gold. Despite the hawkish employment figures, analysts suggest gold’s newfound momentum has room for further growth.
Gold’s Future Prospects
Although gold has not managed to maintain the $2,000 level as the week draws to a close, analysts suggest that the bounce from a two-month low should inject some bullish momentum in the near term. James Stanley, a senior market strategist at Forex.com, observes, “There’s a bullish trendline connecting last Friday’s and this Tuesday’s lows – I think this is in bulls’ courts and it’s theirs to lose, for now.”
However, analysts are not expecting a significant break to new all-time highs next week. According to Colin Cieszynski, chief market strategist at SIA Wealth Management Inc, although a weaker U.S. dollar next week should support gold, he does not foresee prices surpassing the $2,000 an ounce mark.
Of the 19 Wall Street analysts participating in the Kitco News Gold Survey, 53% were bullish on gold in the near term, while 26% were bearish for next week, and 21% anticipated sideways price movements.
Main Street Investor Sentiment
On the other side of the market, retail investors maintain a bullish stance on gold, albeit not expecting record highs in the near future. According to the survey, Main Street predicts gold prices to conclude around $1,997 an ounce next week. As the weekend begins, August gold futures were last traded at $1,971.80 an ounce, marking an increase of 0.40% from last Friday.
Future Influence Factors
For many analysts, the Federal Reserve’s monetary policy stance remains the key driver for gold. Anticipations are growing that the Federal Reserve may pause its aggressive rate hiking when it meets in two weeks. However, economists have emphasized that such a pause would not signify an end to the tightening cycle.
Analysts agree that last month’s substantially higher-than-expected employment gains support the Federal Reserve’s assertive stance. Still, some have highlighted emerging cracks in the labor market, notably the U.S. unemployment rate’s rise to a seven-month high of 3.7%.
Adam Button, chief currency strategist at Forexlive.com, opines, “I believe it will come increasingly clear that the Fed funds rate has peaked and that will be a tailwind for gold. Still the $2070 level looms as major resistance and it’s tough to be overly bullish until it breaks.”
