Panic selling in gold could last a little longer as Wall Street turns bearish on gold, but many look to buy the dip

Washington (Jun 20)  The Federal Reserve unleashed considerable panic in the precious metals market. While there is still some bullish sentiment in the marketplace, some market analysts say that it could take some time for gold to work through all the selling pressure.

The latest Kitco News Weekly Gold Survey results show that sentiment in the precious metals market has dramatically shifted as the gold ends the week down $100. The yellow metal is seeing its worst weekly performance since March 13, 2020, when financial markets collapsed due to the spreading COVID-19 pandemic.

Sentiment among retail investors is at its lowest point since early April when gold prices were just starting their two-month rally.

Colin Cieszynski, chief market strategist at SIA Wealth Management, said that while the move to the downside is significant, it's not surprising. He added that technically, gold prices were overbought ahead of the Federal Reserve's meeting. At the same time, the U.S. dollar was oversold. He said that he sees the price action as one big corrective move from over-stretched positioning for all financial markets.

"The entire market was looking for any excuse to rebalance and they found one in the Fed," he said. "I think gold prices have a little further to go on the downside, but I think a move to $1,700 would attract a lot of buyers."

This week 18 Wall Street analysts participated in Kitco News' gold survey. Among the participants, 10, or 56%, called for gold prices to fall; simultaneously, bullish and neutral analysts were tied this week, with each viewpoint garnering four votes, or 22%.

Although Wall Street analysts are bearish on gold in the near term, many analysts see the current price action as short-term selling pressure and the market can still bounce back.

Meanwhile, 2,174 votes were cast in online Main Street polls. Of these,1,127 respondents, or 52%, looked for gold to rise next week. Another 670, or 31%, said lower, while 377 voters, or 17%, were neutral.

KitcoNews