According to the latest research results, the growth of bond yields and the renewed strengthening of the US dollar disappoint investors in the gold market, and also strengthen the bearish mood among retail investors and Wall Street analysts.
Sean Lusk, co-director of commercial hedging with Walsh Trading, said he is optimistic about gold in the long term since the US debt levels are almost out of control. But in the short term, sales will continue. He added that prices must rise above $ 1,830 an ounce before gold starts attracting investors again. According to him, gold continues to compete with record prices on the stock markets along with high bond yields and the US dollar.
"In order for gold to get stronger, we need to see some uncertainty in the stock markets," Sean Lusk said.
Last week, 15 Wall Street analysts took part in the gold survey – bearish and neutral opinions coincided in the number of votes. There were 7 votes on each side or 47%, and only one analyst, or 7%, remained optimistic about gold. It was the president of Adrian Day Asset Management, Adrian Day, who noted that the precious metal will be resold in the near future. No fundamental changes have occurred, so gold will rebound as usual after a sharp decline.
It should be noted that participation in the online survey has increased compared to the week before last. A total of 757 votes were cast in online polls. Of these, 339 respondents, or 45%, expected an increase in gold prices this week. Another 294 people, or 39%, voted for the sale, while 124 voters, or 16%, remained with a neutral opinion.
Along with the low level of participation, the optimistic mood among retail investors has been at its lowest level since the beginning of March.
The mood in the gold market has changed, as prices have fallen by more than 2% this week.
Last Thursday, the precious metal sharply declined after the release of stronger-than-expected economic data, including a 07% increase in US retail sales.
This week, the gold market will face difficulties when the Fed holds a meeting on monetary policy. Uncertainty is growing on this issue because many expect that the American regulator may publish its plans to reduce bond purchases in connection with the recently released positive economic data.
Nevertheless, some analysts noted that there is a possibility of a short-term upward momentum if the US central bank postpones these plans.
According to Colin Cieszynski, chief market strategist at SIA Wealth Management, gold's growth is possible because the Fed is postponing its plans to reduce.
In turn, Sean Lusk noted that the demand for gold may grow only at the end of the week. The FRS is still pursuing a tighter monetary policy, so this could limit the growth of gold in the short term.