(Kitco News) - Gold trended downward with prices declining 1% during a week that saw the release of U.S. CPI and PPI which showed that inflation pressures persisted. The precious metal has been range bound with prices lacking clear direction as market participants remain divided on whether the Federal Reserve's terminal rate has indeed been reached, or if more rate hikes remain.
Wall Street analysts reflected the market's divided sentiment, with an even split on gold's direction for the coming week, while retail investors are solidly bullish on its prospects.
The latest Kitco News Weekly Gold Survey shows that retail investors expect gold prices to post solid gains during the week ending August 18. Meanwhile, market analysts remain cautious as they await definitive direction from economic indicators and technical trends.
Adrian Day, President of Adrian Day Asset Management, believes that gold is due for some gains next week. "If only as a reaction to last week's decline, gold should rally this coming week," Day said. "There is a battle between the negative forces–-primarily tightening including potential additional rate hikes not priced in, and positive forces, notably, the nearing end of rate hikes, particularly in the U.S., before inflation has been conquered. There is a broad and near-total lack of interest in gold. When sentiment shifts, gold could move up dramatically."
Colin Cieszynski, chief market strategist at SIA Wealth Management, sees gold continuing its recent downward trend. "I am bearish on gold for the coming week," Cieszynski said. "The 10-year US treasury note yield keeps climbing, putting a tailwind behind USD. The next big event is Jackson Hole in two weeks. Until then, gold is just trading counter to USD with not much else happening."
This week, 13 Wall Street analysts participated in the Kitco News Gold Survey. In a perfectly balanced vote, both bullish and bearish positions garnered four votes each, or 31%. At the same time, five analysts, or 38%, were neutral on gold for the coming week.
Meanwhile, 573 votes were cast in online polls. Of these, 320 respondents, or 56%, looked for gold to rise next week. Another 155, or 27%, expected it would be lower, while 98 voters, or 17%, were neutral in the near term.
Wall Street
31%
31%VS
Main Street
56%27%The latest survey shows that retail investors expect gold prices to trade around $1974 per ounce next week.
Next week's most prominent event risks for precious metals are U.S. retail sales for July on Tuesday morning and the release of the minutes from the latest FOMC meeting on Wednesday afternoon, which should give markets a sense of how consumers are faring and how the Federal Reserve feels about the economy.
Darin Newsom, senior market strategist at Barchart.com, is stubbornly bullish on the yellow metal. "Why? Because it didn't work for me last week after I talked about Dec. gold's short-term bullish key reversal on its daily chart," he said. "As the only saying goes, ride the sinking ship to the bottom. Speaking of bottoms, this week has seen Dec. test its previous low of $1,939.20."
Newsom said that from a technical perspective, the December gold futures contract has a number of things going on. "Three weeks down on its weekly chart, bringing to mind a possible Benjamin Franklin Fish Analogy: Like guests and fish, markets start to stink after three days/week/months (whatever time frame is being studied) of going against the trend."
He also pointed to a possible intermediate-term double-bottom on its weekly chart, adding that the weekly chart was more reliable than the daily chart based on the ‘Goldilocks Principle". "Daily charts are too hot, monthly charts are too cold, but weekly charts are just right."
Kitco's own Jim Wyckoff sees a continuance of this week's slow downward price action. "Steady-lower as price downtrend in place on daily bar chart," he said.
Ole Hansen, head of commodity strategy at Saxo Bank, has a neutral perspective on gold prices in the near term. "There is no urgency to get into the gold market," Hansen said. "We don't see a trigger for higher prices anytime soon."
Edward Moya, senior market analyst at OANDA, also sees gold trading sideways next week. "The long-term interest in gold is there but this is going to be a tough environment," Moya said. "Gold will struggle until we see a market risk event."
Marc Chandler, Managing Director at Bannockburn Global Forex, sees gold bottoming before trending upward next week.
"I had anticipated gold to recover after the US CPI and the US refunding, but alas, the dollar and US rates proved more resilient, and gold (spot) reached almost $1910 ahead of the weekend," Chandler said. "The downside momentum is faltering, and I think the risk-reward ahead of the 200-day moving average around $1900 still favors bottom picking."
"Next week, the focus turns to US real sector data—retail sales, industrial production, and housing," Chandler said. "A close above the $1920 area would help solidify a bottom."
Gold prices are still down over 1% as the weekend approaches, with spot gold last trading at $1913.26 an ounce at the time of writing.
