Gold prices holding critical support but still stuck in neutral

September 11, 2020

New York (Sept 11)  Rising inflation pressures weighing on negative real yields is creating solid support for gold. Still, the market remains stuck in neutral in the near-term, according to Wall Street analysts in the latest results in the Kitco News weekly gold survey.

Meanwhile, bullish sentiment has jumped significantly higher among retail investors as the precious metal’s trading range continues to narrow.

“Gold is a little bit dull right now, but we should see some excitement soon,” said Phillip Streible, chief market strategist at Blue Line Futures. “The wedge is getting tighter and is getting closer to a breakout. There is a strong floor in the prices, so we are optimistic that prices will break to the upside.”

This week, 15 Wall Street professionals took part in the latest Kitco survey. Among the participants, five voters, or 36%, called for gold prices to rise; three analysts, or 21%, said they expect to see lower prices and six voters, or 43% were neutral on the precious metal.

“I believe gold needs to do some more work within the established range,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Hansen added that he also doesn’t think gold has seen it lows in this new consolidation period.

Among retail investors, sentiment rose to its highest level in a month.

A total of 1,359 votes were cast in an online Main Street poll. Of these, 926 respondents, or 68%, looked for gold to rise next week. Another 205, or 15%, said lower, while 228 voters, or 17%, were neutral.

Many analysts said that they are neutral on gold because of renewed momentum in the U.S. dollar. The U.S. dollar index is ending the week above the critical psychological level around 93 points.

Mark Lebovits, publisher of VR Metals/Resource, said that he is bearish on gold because of the recent rally in the U.S. dollar.

Although the bulk of market analysts are neutral on gold, there is still strong bullish sentiment in the marketplace as prices hold support above $1,900 an ounce.

“Gold is being very resilient in resisting a pullback, bouncing off support that has held since the early August drop and the 50-day moving average,” said Adrian Day, president and chief executive officer of Adrian Day Asset Management.

Darin Newsom, president of Darin Newsom Analysis, said that he is bearish on gold because the technical picture is bearish; however, he warned investors: “A market that can’t go down, won’t go down.”

“There is something that is holding the price up and I think it is all the tension and uncertainty in the marketplace,” he said.

Ultimately, he said that he is bearish because he expects the U.S. dollar to eventually push gold below $1,900 an ounce. He added that he is watching gold’s four-week low at $1,874 as critical support.

Charlie Nedoss, senior market strategist with LaSalle Futures Group, said that although technically, gold looks heavy, he is optimistic that prices will rebound next week.

“Last week, we were testing support at the 50-day moving average and now we are up on the week challenging the 20-day moving average,” he said. “I think the path of least resistance is up.”

Nedoss said that he would like to see gold prices close the week above $1,954. He added that ultimately the uptrend is still intact as prices trade above $1,941 an ounce.


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