Gold market sees muddle sentiment, but price needs to hold above $1,620 next week

Once again, gold is poised on a knife's edge as the prices end the week below $1,650 an ounce, and muddled market sentiment is unlikely to provide any clear direction for the precious metal next week.

Latest Kitco News Gold Survey shows that bullish analysts and retail investors have a slight advantage; however, there is no dominant conviction in the marketplace.

According to some analysts, many investors continue to sit on the sidelines, waiting for a clear indication that the Federal Reserve will slow the pace of its aggressive rate hikes by the end of the year. According to analysts, the Federal Reserve's monetary policy meeting on Nov. 2 will be the driving force behind gold prices next week.

For most of the summer, investors have been continuously burned after chasing rumors that the Federal Reserve was close to pivoting. Sean Lusk, co-director of commercial hedging at Walsh Trading, said that he expects current market expectations to fade, similar to other market rumors. Lusk said he is expecting to see lower gold prices next week.

"Until we get clarity from the Federal Reserve, gold rallies will continue to be sold," he said. "I don't think we will get much clarity from the Fed next week. There is a cost to all money printing we have seen over the last two years, and we should expect to feel the cost longer than most expect."

Lusk added that he will be watching the $1,620 area closely. A break below would trigger a very bearish signal.

Kitco's weekly gold survey results revealed that Wall Street has a slightly bullish tilt on gold prices next week. Out of 17 analysts participating in the survey, seven analysts, or 41%, expect prices to rise next week. Meanwhile, six analysts, or 35%, were bearish in the near term and four analysts, or 24%, were neutral on gold.

Sentiment on Main Street was relatively similar. This week 473 respondents took part in online polls. A total of 200 voters, or 43%, called for gold to rise. Another 169, or 37%, predicted gold would fall. The remaining 94 voters, or 20%, called for a sideways market.

Phillip Streible, chief market strategist at Blue Line futures, said that he remains neutral on gold in the near term as the Federal Reserve's rate hikes will continue to weigh on the precious metal.

"There is nothing stopping gold from going below $1,600 an ounce in the near term, and that's not a bold statement," he said. "However, if gold does drop, I would be looking to buy small positions. I would be looking to buy silver if the price dropped below $18 an ounce.

World Bank sees gold prices falling another 4% in 2023

For most bullish analysts, the growing expectations that the Fed will slow its rate hikes starting in December will support prices in a volatile environment.

"Technically, it looks like gold is slowly turning the corner. Gold appears likely to be volatile around next Wednesday's Fed decision which could potentially impact the trend in the US Dollar depending on whether the Fed is more hawkish or more dovish than expected and relative to other central banks," said Colin Cieszynski, chief market strategist at SIA Wealth Management.

Darin Newsom, president of Darin Newsom Analysis, is also expecting some volatility next week. However, he added that as long as gold can hold above its recent lows around $1,620 an ounce, then it will remain in an intermediate-term uptr

By Neils Christensen

For Kitco News

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