(Kitco News) - It has been a massive week for gold as prices end the shortened trading week above $2,000 an ounce. While there is still healthy bullish momentum in the marketplace, a growing chorus of analysts suggests that the gold market might consolidate before taking a run above its all-time highs.
Although analysts see a growing two-way trade in gold, the Kitco News Weekly Gold survey shows that retail investors remain extremely bullish on gold and are looking for prices to continue to test resistance just below $2,050 an ounce.
Despite the near-term cautious outlook among Wall Street analysts, many have said that gold remains a solid buy as volatility continues to dominate financial markets.
"Technically, gold is looking a little overbought at current levels," said Sean Lusk, co-director of commercial hedging at Walsh Trading. "But there are solid reasons why we are trading at these levels. We are seeing significant diversification into the precious metals because of major uncertainties in the world."
Craig Erlam, senior market analyst at OANDA, said that gold will continue to benefit from falling bond yields and a weaker U.S. dollar. He added that rising recession fears and the growing expectations that the Federal Reserve has finished raising interest rates will continue to support gold.
On the flip side, Erlam said that stronger-than-expected employment data or hot inflation numbers next week could derail gold's rally; however, he added that the data has to be much higher than expected.
"Any disappointing data or even numbers in line with expectations and we will see gold make a run to its record highs," he said.
This week, 22 Wall Street analysts participated in the Kitco News Gold Survey. Among the participants, ten analysts, or 50%, were bullish on gold in the near term. At the same time, bearish and neutral expectations garnered five votes each, or 25%
Meanwhile, 647 votes were cast in online polls. Of these, 430 respondents, or 66%, looked for gold to rise next week. Another 121, or 19%, said it would be lower, while 96 voters, or 15%, were neutral in the near term.
Wall Street
50%
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66%19%Sentiment in the gold market is relatively unchanged from the previous week and comes as gold prices look to start the Easter long weekend with a nearly 2% gain from last Friday. June gold futures last traded at $2,025.80 an ounce.
Along with gold's weekly gains, analysts note that the precious metal ended March up 7%. While maintaining their bullish outlook, most analysts said that gold needs a rest. Michael Moor, founder of MoorAnalytics.com, said he sees a solid exhaustion level at $20,052.80 an ounce.
Adam Button, chief currency strategist at Forexlive.com, said he is neutral on gold in the near term but is content to wait.
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Bank of America is looking for $2,100 gold price by Q2 |
"$2070 is a huge level; if that breaks, then the sky is the limit. If not, we wait," he said.
Adrian Day, president of Adrian Day Asset Management, said that although he is bearish on gold for next week, he expects any correction to be short and shallow.
"Though the market appears to want to go up, gold is overdue for pullback," he said. "There is a growing demand for gold among both institutional and retail investors that will limit any downside."
