Gold has room to move higher but sentiment is starting to shift

Welcome to Kitco News’ 2023 Outlook Series. Uncertainty continues to dominate financial markets as central bank monetary policies push the global economy into a recession to cool down inflation. Stay tuned to Kitco News to learn from the experts on how to navigate turbulent financial markets in 2023.

(Kitco News) – gold‘s significant upside momentum, with prices testing resistance at a nine-month high, is helping to drive bullish sentiment in the marketplace, but analysts also continue to warn investors not to chase the market.

The latest Kitco News Weekly Gold Survey shows that bullish analysts have a slight advantage heading into the weekend; however, a large block of analysts have moved to the sidelines as they believe the precious metal is looking a little overextended.

At the same time, the survey shows that retail investors are significantly bullish on gold prices next week; however, a low participation rate in this week’s online surveys doesn’t add a lot of conviction to the positive market sentiment.

Sean Lusk, co-director of commercial hedging at Walsh Trading, said it is hard to ignore gold‘s bullish momentum. He explained that growing headwinds for the U.S. economy are creating a lot of uncertainty around the Federal Reserve’s monetary policy stance, which is benefiting gold.

“I think this rally has some room to move higher,” he said. “The whisper number is $2,000 and that is when you will see investors take profits on their long positions. As long as gold can stay above $1,920, I think it has a shot of going higher.”

On the other side, Colin Cieszynski, chief market strategist at SIA Wealth Management, said he is looking for gold to consolidate around current levels before resuming its higher path.

“While the longer-term trend remains positive for Gold, technically, it has had a good run lately and is looking a bit tired and due for a brief pause,” he said.

This week, 18 Wall Street analysts participated in the Kitco News Gold Survey. Among the participants, eight analysts, or 44%, were bullish on gold in the near term. At the same time, four analysts, or 22%, were bearish for next week and six analysts, or 33%, saw prices trading sideways.

Meanwhile, 783 votes were cast in online polls. Of these, 500 respondents, or 64%, looked for gold to rise next week. Another 169, or 22%, said it would be lower, while 114 voters, or 15%, were neutral in the near term.

Participation in this week’s online surveys dropped to a one-month low.

The overall bullish stance in the marketplace comes as the gold market ekes out its fifth consecutive week of gains. February gold futures last traded at $1,927.80 an ounce, up 0.31% from last Friday.

Adrian Day, president of Adrian Day Asset Management, said that he is also looking for gold to fall next week, but he sees any dip in the market as a long-term buying opportunity.

“Gold needs a break after the strong run-up and it could be sparked by commentary around the Federal Reserve’s upcoming meeting. Given current expectations, there is more potential for disappointment than a pleasant surprise. After a brief and shallow pullback, gold will be strong again; nothing has changed the story for the year,” he said.

For many analysts, the U.S. dollar remains the biggest risk for gold. The U.S. dollar index is ending the week relatively flat, holding support just above 102 points. Analysts believe its 10.5% drop from September’s 20-year high is a big reason why gold is up 5% in the first month of 2023.

However, some analysts see the selloff in the U.S. dollar as a little overdone and think it could find some support ahead of the Federal Reserve’s monetary policy meeting next month. The central bank is expected to raise interest rates by 25 basis points, a slower pace than previously anticipated.

“The U.S. dollar index is forming a bottom on its daily chart, indicating its short-term trend is turning up,” said Darin Newsome, senior technical analyst at “While the fundamentals of neither market have changed, Feb gold is short-term overbought and the U.S. dollar index short-term oversold.”

Disclaimer: The views 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 accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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