19 Wall Street Analysts: Gold Could See These Levels Next Week!

Healthy US labor market data solidified market expectations that the Federal Reserve will continue to raise interest rates aggressively for the remainder of the year and through 2023. With the effect of this, sentiment on Wall Street has plummeted. Moreover, the short-term rally in the gold price has come to an end.

Gold faces strong headwinds from the dollar

Following the developments, the Wall Street Kitco Weekly Gold Survey turned down. However, personal investors continue to rise in the precious metal with the favorable sentiment compared to last week. Individual demand for gold remains healthy. In this midst, the US dollar bounced back from its recent base levels and closed the week near its 20-year high. Many analysts say the expensive metal continues to face strong headwinds from the dollar. Colin Cieszynski, chief market strategist at SIA Wealth Management, comments:

Gold has had a nice boom in the last few days. However, the US dollar gained momentum again. Also, with today’s employment report, the hopes of the last dove pivot of North American central banks were crushed. Thus, we will likely see the dollar continue its uptrend.

“Gold’s latest rally is based on closing shorts rather than new longs”

Markets are seeing more than 81% baht that the Fed will raise interest rates by 75 basis points next month. Koindeks.com As you follow, the US Office of Labor Statistics announced that 263,000 jobs were created in September. Economists had expected to see an increase of about 250,000 jobs. Following this information, expectations for rate hikes gained strength.

Nicholas Frappell, global managing director of ABC Bullion, says the recent rally has not attracted any new bullish momentum. Therefore, he notes that there is a bearish trend on gold in the short term. The analyst explains his views as follows:

From September 27 to October 5, CME Total Open interest fell by approximately 2.40 million Tozs. This suggests a rally based on closing more shorts than new longs in light of recent price action. On stability, I think the Fed’s tightening path is still solid.

What do the gold survey results show?

This week, Kitco used a total of 19 market professionals in the Wall Street survey. Eleven analysts (58%) said they were in a bearish trend for gold next week. Five analysts (26%) said they were bullish on gold. Three analysts (16%) remained neutral on the precious metal in the near term.

On the individual side, 790 contributors voted in online polls. A total of 451 voters (57%) expect gold to rise. 222 of the participants (28%) predict that gold will fall. The remaining 117 voters (15%) foresee a sideways movement.

“That’s when the yellow metal will recover”

While gold is seeing short-term selling pressure, some analysts expect the expensive metal to find decent reinforcements. Adrian Day Asset Management leader Adrian Day says gold has overcome its short-term weakness. The analyst comments:

The economy is turning negative. Also, global economies are hurting by the strong dollar. At some point something will break and the dollar will fall. Or, the Fed will stop. Or it will be both. That’s when gold will recover.

“Gold investors should be patient…”

Blue Line Future chief market strategist Phillip Streible says gold is in a bearish trend next week. However, he adds that the long-term rally is far from over. He notes that reliable port demand should continue to provide a base for prices. In this context, the analyst makes the following recommendations:

Gold investors should be patient and focus on the long-term potential. When the Fed finishes raising rates, gold will be the best trade. But we just have to wait for the Fed to change course. However, it is possible that this will take longer than some expect.

Analysts await US CPI data for greater clarity

There is a precious bearish sentiment in the market. However, some analysts see more potential for gold in the near term. Matthew Simpson, senior Market Analyst at City Index, notes an increase in call options in December gold futures as a bullish signal as prices closed the week above $1,700. He adds that although gold rallied last week, the market remained very oversold.

Trading information earlier in the week shows gold’s bearish trend at a four-year high. Some analysts say it will take more time for exposed shorts to unwind. On the other hand, some analysts emphasize that the direction of gold will depend on the Consumer Price Index next week. Analysts say that if the report shows a significant drop in inflation, it will likely cause markets to lower their expectations for a very hawkish rate hike by the Fed next month, which will be positive for gold.

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