Market analysts and retail investors await Fed's direction on gold prices – Kitco NEWS

(Kitco News) – Gold prices moved in a narrow $10 range this week between $2,016 and $2,025, with little reaction to even the most important data releases and corporate earnings reports.

Latest Kitco News Weekly Gold Survey shows institutional professionals and retail traders remain cautious, forecasting a pivotal week for central banks and employment data There is no clear consensus on the direction of gold heading into this week.

Adrian Day, president of Adrian Day Asset Management, believes this week's moderate inflation data will boost gold prices next week.

“Given the low core PCE numbers again this week, the probability that the Fed will raise rates in March has increased (in my opinion),” Day said. “Then the value of gold will rise.”

Darrin Newsome, senior market analyst at Barchart.com, sees gold caught between conflicting technical trends.

“This is a difficult question because the April contract hit a new low during trading on Thursday and then rebounded to close higher for the day,” he said. “This indicates that the contract may still try to move into a short-term uptrend while having to fight a medium-term downtrend on the weekly chart. It seems the opposite is true.”

“We're bearish on gold next week,” said Colin Sieczynski, chief market strategist at SIA Wealth Management. “In my opinion, the Fed may not be as dovish as the public expected, which could cause the USD to rise and create a headwind for gold.”

Frank Chorley, senior market strategist at RJO Futures, said investors should expect an extended period of sideways movement in prices.

“I think the gold market is just about to break above $2,000 here,” Choley said. “It’s hard to put a bottom on this level, but I think the baseline…I think the Fed is more likely to just keep rates high for a long period of time rather than lower them right away. That’s not necessarily good for gold. I don't think it bodes well, but the technical level is important and I think to maintain a level above 2000 is to some extent a positive thing.”

“We can follow these bonds and see what the bond market tells us about the Fed's future direction, but for now we're just going to focus on the dollar.” “As long as gold prices remain above $2,000, I am reasonably optimistic about the price trend. If gold falls towards $1,950, I think buyers will emerge to support that level.”

Looking ahead, Choley believes that the gold price may fluctuate around Powell's press conference next week.

“My view at this point is that the trading range could widen and some volatility could return to the market,” he said. “I'm going to look at the charts and consider where the market might see value or where we might run into some good resistance. Obviously, $2,100 on the upside is a bit of a hurdle, but… , I think $1,950 on the downside will be a significant support level. You can see the market bouncing back and forth within that larger range and spending quite a bit of time between $2,000 and $2,050.”

As for when the market could receive a clear signal from the Fed about a rate cut, Choley said he expected the Fed to do nothing for some time. “We won't see anything until June.”

This week, 14 Wall Street analysts participated in the Kitco News Gold Survey and remained cautious about gold's near-term price potential. Five experts (36%) expected gold prices to rise next week, and three analysts (21%) expected gold prices to fall. Six experts, representing 43%, expected gold prices to remain flat next week.

Meanwhile, Kitco's online poll had 89 votes cast, showing retail traders were slightly more bullish, but remained indecisive overall. 43 retail investors, representing 48%, expected gold to rise next week. Furthermore, 26 (29%) respondents expected prices to fall, while 20 (23%) respondents were neutral about the short-term outlook for precious metals.

While the continuing conflict in the Middle East will garner some attention, the market's main focus will be on US jobs data, the Fed's interest rate decisions, and Fed Chairman Jerome Powell's press conference.

The Fed is expected to keep interest rates on hold in Wednesday's FOMC announcement, but the pressure on Chairman Powell will be an opportunity to rein in expectations of wild rate cuts that he announced in his last press conference.

In addition to the US non-farm jobs report for December, which will be released on Friday morning, the market will be weighed by Tuesday's US Consumer Confidence and JOLTS job numbers, Wednesday's ADP jobs report, the Bank of England's monetary policy announcement, and weekly unemployment claims. We are also paying attention to the number of cases and ISM. December manufacturing statistics will be released on Thursday.

Jameel Ahmad, principal analyst at GTC Global Trade Capital, said he expects gold prices to fall from recent highs.

“I see a risk of a drop below $2,000, as expectations for US interest rate cuts have subsided significantly and given the late-game rebound, we could see further USD strength. 2023. ”

“Continued demand for the dollar is actually likely to threaten further declines in gold.”

Ahmad The consensus was that today's gold price still reflects some irrational optimism about the timing and magnitude of interest rate cuts.

“If you take into account that the US dollar has had its best start to the year at one point since 2011, and the actual gold price itself, we're still down just over $50 on candlesticks alone,” he said. Stated. . “Everyone is on the Fed's bad side, considering the Japanese Yen has fallen by about 800 pips and the decline in assets we've seen so far. Considering the US economic indicators, 75 basis points at the moment. Even so, it seems optimistic.”

Another reason Mr. Ahmad thinks even the more conservative outlook for rate cuts is optimistic is the ongoing conflict in the Red Sea. “This is a situation where everyone is hoping there won't be an inflationary pressure cooker, but this is also a volatile situation, and no matter how unfortunate it is for the average person in the street, central bank “This provides further impetus to keep interest rates high,” he said.

“Where gold could come to the rescue is if there is a very sudden geopolitical surge,” Ahmad said. “But again, if the dollar actually strengthens, perhaps because inflation expectations rise, then gold may not benefit as much. There are a lot of very uncertain issues in the world. Yes, and it continues to be so.”

Ahmad He believes Federal Reserve Chairman Jerome Powell's Wednesday press conference is a major risk factor for gold prices.

“The devil is in the details when it comes to Mr. Powell. Investors just hope it doesn't turn out to be a big deal like what happened yesterday with Christine Lagarde and the ECB.” “Clearly, there is a mismatch between what the Fed has prepared for the market, or at least what the market has been convinced of, and what the reality is on the economic data.”

“The only benefit of the U.S. economy remaining so strong and resilient is that we are headed for a soft rather than a hard landing, which would lead to even greater turmoil in global financial markets,” he said. Probably.'' “However, noting that global markets remain near record highs, gold is actually less volatile given the dollar movement, despite the Fed's reduced interest rate rhetoric.” . Someday, something will break the camel's back.”

“Maybe we'll see a pullback in global markets, not because of a big move in gold, but because interest rates aren't moving as fast as everyone thought,” Ahmad said. “From an investor perspective, that might be something I would look at.”

Adam Button, head of currency strategy at Forexlive.com, expects gold prices to remain in recent holding patterns. “Seasonal tailwinds have failed this year as markets reassess the Fed's policy direction,” he said. “The best bet for gold over the coming week is weak non-farm employment data.”

James Stanley, senior market strategist at Forex.com, remains bullish next week. “Sellers have not been able to test sub-$2,000 yet, so the downward wedge remains,” he said. “USD bulls had ample opportunity to ride the trend when it broke above the 200 DMA earlier this week, but were unable to sustain the move.”

“I think the path of least resistance for gold going into next week's FOMC meeting will be higher,” Stanley said.

Mark Leibovit, publisher of VR Metals/Resource Letter, said he still sees significant upside potential for gold this year, but also sees the possibility of a correction in the short term. “We will remain bullish until 2024,” he said. “Here let him bet 1980 in gold. The target is 2700.”

And Kitco senior analyst Jim Wyckoff expects gold prices to rise next week. “The bulls have the overall technical advantage in the short term, which is why we are seeing a steady rally,” he said.

Spot gold fell 0.12% on Friday and is down 0.54% this week, ending one of the most eventful weeks in recent memory, with the last traded price at $2,018.59 per ounce.