(Kitco News) - The threat of a potential war in Eastern Europe and fear that central banks won't be able to contain inflation has pushed gold prices to $1,900 an ounce, an eight-month high. Solid bullish sentiment indicates that price could go higher in the near term.
The latest Kitco News Weekly Gold Survey shows that a significant majority of market analysts and retail investors are bullish on gold in the near term. While there are concerns that any easing tensions between the U.S. and Russia could cool safe-haven demand, analysts note that gold remains well supported on dips.
"There is strong technical momentum in gold as prices test resistance at $1,900, but you don't want to chase the market. Look for buying opportunities," said Sean Lusk, co-director of commercial hedging with Walsh Trading.
This week 18 Wall Street analysts participated in Kitco News' gold survey. Among the participants, 13, or 72%, called for gold prices to rise. At the same time, three analysts, or 22%, called for lower gold prices next week. One analyst, or 5%, was neutral on gold in the near term.
Meanwhile, 864 votes were cast in online Main Street polls. Of these, 564 respondents, or 65%, looked for gold to rise next week. Another 196, or 23%, said lower, while 104 voters, or 12%, were neutral in the near term.
Wall Street
72%
22%VS
Main Street
65%23%The broad-based bullish sentiment comes as gold prices look to end the week with nearly a 3% gain as prices hold just below $1,900 an ounce.
In the latest gold survey, many analysts said they are bullish on gold as the price has broken critical technical resistance points. They added that they are looking for prices to push solidly above $1,900 an ounce in the near term.
Lusk said that he sees potential for gold prices to push to $1,916 in the near term. Looking beyond current geopolitical safe-haven demand, Lusk said that growing market uncertainty as central banks look to tighten their monetary policies worldwide is creating some uncertainty in equity markets.
"Easy money propelling stock prices is ending a great reset is coming; we just don't know how bad it is going to be," he said. "That uncertainty will continue to support gold on any dips."
Phillip Streible, chief market strategist at Blue Line Futures, said that he thinks gold price could drop if geopolitical tensions ease. However, he also noted that weak equity markets would support gold prices in the near term.
"Right now, gold investors need to be patient and buy the dips," he said.
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Darin Newsom, president of Darin Newsom Analysis, said that technically, gold is overbought and due for a correction. However, he added that he would not be shorting gold right now.
"I do not want to be short gold or oil going into the long weekend because I have no idea what will happen with Ukraine," he said. "Yes, gold is overbought, but I am not going to be the guy to sell right now."
Adrian Day, president of Adrian Day Asset Management, said that he also sees lower prices next week; however, he would be cautious selling gold in the current environment.
"A short-term pullback is in order, but events in Ukraine could change things suddenly," he said.
Colin Cieszynski, chief market strategist at SIA Wealth Management, was the lone neutral vote on gold this week. He said that gold's next move would depend on what happens in Eastern Europe.
"I actually think [gold] could have a significant move related to rising/falling political tensions in Ukraine, but it's difficult to pick a direction," he said. "Gold had a great rally this week and is due for some backing and filling, but if the situation worsens, the current rally could extend for longer."
