Gold price may move sideways this week

 Gold price may move sideways this week

Analysts hesitated in their near-term gold forecasts, while retail investors remained optimistic as the precious metal held near two-week highs.

The results of Kitco News' weekly gold price survey show a sharp divergence in sentiment on Wall Street. Some analysts do not believe that gold remains an attractive asset, but retail investors still put their faith in the precious metal due to inflation concerns.

On February 11, the University of Michigan (USA) said that consumer sentiment has dropped to a 10-year low. The report notes that consumers expect inflation to remain at 5% for 2022 and this becomes a major drag on their sentiment.

This week, of the 15 Wall Street analysts who participated in the gold price survey, only 40% forecast gold prices to rise next week. Four analysts (27% respectively) forecast a decline in gold prices, while five (33%) hold a neutral view on gold.

Meanwhile, out of nearly 600 retail investors surveyed, 62% expect gold prices to continue to increase next week, 21% forecast a decrease to 16% keep a neutral view.

Gold price survey results for the week of February 14-18. Photo: Kitco

Gold price survey results for the week of February 14-18. Photo: Kitco

In addition to consumer sentiment, some experts also note that rising bond yields and interest rate hike expectations also increase market volatility and gold becomes a good hedge.

David Madden, market analyst at Equiti Capital, is bullish on gold as equity market volatility is supporting the precious metal. However, the expert thinks it will be difficult to see a break above $1,850 per ounce in the short term.

Sean Lusk, co-head of commercial hedging at Walsh Trading, said he is also watching the stock market to determine gold's next move. "Stock market volatility will be the key factor and any further weakness will support gold prices," Lusk said. “For now, any dip in gold should be seen as a buying opportunity.”

Some analysts are also bullish on gold as the precious metal price remains firmly above $1,800 and is retesting resistance around the $1,835 per ounce area.

However, other analysts see gold in a sideways trend, in the range of $1,750 to $1,850 per ounce.

Nicholas Frappell, global general manager at ABC, said that technically, gold is stuck in a sideways price range. However, Frappell believes that gold has a chance to explode if geopolitical tensions heat up between Russia and the US over Ukraine.

While there are still some supportive factors, some other analysts note that the precious metal will not be able to rise sharply as the US Federal Reserve looks to aggressively tighten monetary policy to counter the threat. inflation threat is increasing.