© Reuters.
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Investing.com – The gold market ended its sixth consecutive month of trading lower, but sentiment is improving as some of the safe haven demand returns to the market.
Kitco News’ latest gold survey shows both Wall Street analysts and Main Street retail investors are bullish on gold in the short term with prices ending the week at a significant support / resistance level long-term after bouncing off a new two-year low.
ILLUMINATING RESTORATION
According to analysts, the luster of gold as a safe haven has regained some of its luster after huge fluctuations in global financial markets. Earlier in the week, the Bank of England was forced to intervene in the global bond market and buy long-term gold bonds. The collapse of UK bonds began after the government announced it would spend nearly £ 300 billion to support its conflicting economy.
The deficit spending plan also pushed the British pound down to an all-time low against the United States. Analysts note that the BoE’s intervention in the market came less than a week after the Bank of Japan was forced to support its currency for the first time since 1998 due to the growing momentum of the US dollar.
Colin Szyczinski, chief market strategist at SIA Wealth Management, said that while gold struggles against the US dollar, it is holding near record levels against the pound.
“When there is chaos in the markets, gold becomes a very attractive global currency and this should help it maintain its attractiveness against the US dollar,” he said. “We are seeing an interesting tradable rebound in gold and we will have to wait and see if it turns into something else.”
Optimism about gold
This week, a total of 16 market professionals took part in a Wall Street Kitco News poll. Ten analysts, or 63%, said they were optimistic about gold next week. Meanwhile, bearish and neutral views for next week have been pegged at 3 votes for the piece, or 19%.
On the retail front, 731 respondents participated in online surveys. 389 voters, or 53%, asked for a raise in gold. Another 225, or 31%, predicted a decline in gold. The remaining 117 voters, or 16%, asked for a side market.
The bullish sentiment comes as the week ended up 1%. This is only the second positive weekly close in the past eight weeks.
conflicting views
Darren Newsom, head of analysis Darren Newsom, said the move created a major technical reversal to the upside. “This would confirm that the medium-term trend has improved,” he said.
He added that there are also indications that the US dollar has peaked in the near term.
“China has been making noise about selling the US dollar and the index could approach the long-term high of the monthly chart. If so, it could draw money from liquidity in other markets, including gold,” he said.
Not only is gold creating short-term bullish technical momentum, but Philip Strebel, chief market strategist at Blue Line Futures, said gold and silver are entering a strong seasonal period.
He added that he recommends buying February gold call options to reduce risk if this new momentum wears off.
“Seasonally, gold has risen over the next 12 weeks over 13 years,” he said.
However, not all analysts are optimistic about gold in the short term. Jim Wyckoff, chief technical analyst at Kitco.com, said the chart still shows gold in a downtrend, which could continue to weigh on sentiment.
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