Wall Street analysts and retail investors reach bullish consensus on gold prices

• 

Ernest Hoffman

Friday October 13, 2023 16:12

***** News

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(***** News) -Goldprices saw their strongest performance since early spring this week, with the precious metal buoyed by short covering and a strong safe haven bid at both the beginning and the end of the week.

The latest ***** News Weekly Gold Survey sees market analysts and retail investors with a near-identical bullish consensus on the yellow metal's prospects for the week ending October 20.

John Weyer, Director of the Commercial Hedge Division at Walsh Trading, said today's massive price spike at 8:30 am EDT is what you see when the market opens with full participation and all eyes ongold. "I'm wondering if all the players showed up today and decided to go long," he said. "I think ahead of the weekend, with all the events in Gaza, Israel, it's a little bit of a risk-off safe-haven play."

Weyer added that "we might give some of this back on Monday" if things remain steady with no additional escalation over the weekend. "I expect to be a little back and forth, but be higher next week," he said.

"I am bullish ongoldfor the coming week," said Colin Cieszynski, chief market strategist at SIA Wealth Management. "It looks like US treasury yields and the US Dollar have paused for the moment and that may continue with focus turning to corporate earnings. Meanwhile with the war drums pounding louder, precious metals may continue to attract renewed interest in their haven for capital role."

James Stanley, senior market strategist at Forex.com, sees more strength from the precious metal next week. "Gold put in a massive showing this week even as USD strength came back online," he said. "The response to the oversold backdrop that I was talking about a couple of weeks ago has been intense and at this point, I see no evidence of that being finished."

This week, 14 Wall Street analysts participated in the ***** News Gold Survey. Ten experts, or 72%, expected to see higher gold prices next week, while two analysts, or 14%, predicted a drop in price, and two others were neutral on gold for the coming week.

Meanwhile, 595 votes were cast in online polls. Of these, 431 retail investors, or 72%, looked for gold to rise next week. Another 106, or 18%, expected it would be lower, while only 58 respondents, less than 1%, were neutral about the near-term prospects for the precious metal.

Wall Street

Bullish72%

Bearish14%

Neutral14%

VS

Main Street

Bullish72%

Bearish18%

Neutral1%

The latest survey shows that retail investors expect gold to trade around $1,902 per ounce next week, which is $60 above last week's prediction, but is also $26 lower than the current spot price.

The coming week is another relatively quiet one in terms of data. The most significant report will be the Tuesday release of U.S. retail sales numbers for September, with economists warning that weak consumption would make it more challenging for the central bank to raise interest rates next month. Other noteworthy events are the Empire State and Philly Fed surveys, and a speech by Fed Chair Jerome Powell on Thursday.

Everett Millman, Chief Market Analyst at Gainesville Coins, said that a number of factors contributed to gold's standout performance this week.

"I think some of it is a spillover from earlier this week, the fact that CPI came in slightly hotter than expected, and also the University of Michigan Consumer Sentiment Survey was quite a bit below expectations," he said. "I think that this all just fits a theme of the economy being on slightly shakier ground than I think markets were pricing in, and with how far gold had fallen coming into this week, I think a lot of it is potentially just trader positioning."

He also noted that the most recent Commitments of Traders Report on gold showed that much of the managed money selling had become exhausted, resulting in them closing out short positions. "And then, just the obvious geopolitical tensions, everything going on, not just in Israel and Palestine, but still in the background, of course, we have Ukraine," he said. "There's even overlooked coups going on in West Africa right now."

Millman said that all of this has been "brewing in the background," and it also helps to explain the ongoing central bank gold buying.

"It is a monetary policy strategy, but I think it's also a safe-haven preparation for wartime," he said. "Andgolddefinitely tends to shine brightest, if perhaps only briefly, when there are major geopolitical tensions, major potential for war."

For next week, Millman will be watching the rangegoldwas trading in towards the end of last month. "At the end of September when gold was holding above 1900, but really couldn't break above resistance at 1950. I think that trading band is really what I would be targeting," he said. "I would expect to see gold consolidate these gains and trade between 1900 and perhaps slightly above that, up to 1950."

Marc Chandler, Managing Director at Bannockburn Global Forex, said this was the yellow metal's best week since the March flare up of bank tensions, and noted that the timing of this week's move was interesting.

"The biggest part of the rally did not come on Monday as the markets responded to the Hamas attack on Israel and the anticipation of the likely response, but ahead of the weekend, encouraged by a pullback in the dollar and US rates," Chandler said. "Despite the higher-than-expected CPI, PPI, and deluge of supply, the 10-year yield is more than 20 bp lower on the week. I like that gold held above $1800 earlier this month and the gap higher opening on October 9 is still a bullish sign."

He added that the next target is near $1929-30, followed by $1950. "I suspect that a series of weak US data in the coming days can press rates and the dollar lower, and help lift gold," Chandler said.

Michael Moor, creator of Moor Analytics, said he'd warned investors about additional short covering on Friday. "Decent trade above 1929.7-31.3 will warn of continued strength. Decent trade above 1944.1 (-.5 of a tic per/hour starting at 7:00am) will warn of strength for days/weeks ($127 minimum)," he said. "If we break above here decently and back below decently, look for decent pressure."

Darin Newsom, Senior Market Analyst at Barchart.com, said he's "nervously bullish on gold" next week, after cautioning last week that the long-term downtrend remained in place.

Adrian Day, President of Adrian Day Asset Management, sees gold prices trading flat next week after this week's big move higher.

"Geopolitical rallies in gold tend not to last long," Day said. "For the gold price next week, much depends on the developments in the Middle East. Most likely tensions will remain high and so will gold. In the longer term, monetary factors are more important for the gold price; these suggest perhaps weakness in the immediate term (monetary tightening, reduced bank lending) but extremely bullish by the turn of the year as the economy slows, inflation remains stubborn and the Fed is unable to tighten more."

Mark Leibovit, publisher of the VR Metals/Resource Letter, remains as bullish as ever. "Cycle's up through year-end," he said.

And ***** Senior Analyst Jim Wyckoff has also turned bullish on the precious metal. "Higher on safe-haven demand," he said.

Gold prices are currently up over 3% on the session, and over 5.25% on the week, with spotgoldlast trading at $1,928.03 an ounce at the time of writing after hitting a high of $1,930.80 shortly after 2 pm EDT.