Wall Street turns bearish on gold price, warns of volatility ahead of Jackson Hole
Editor’s Note: With such volatility in the markets, stay up to date with daily news! Get our quick roundup of today’s must-see news and expert opinion in minutes. Register here!
(Kitco News) – As gold ends the week down 3%, Wall Street turns negative on gold for the next week, blaming a strong US dollar and pressure from the upcoming Jackson Hole symposium.
Gold fell under pressure from the greenback on Friday as the US dollar index hit 20-year highs. December Comex gold futures last traded at $1,763.10, down 3% on the week.
Markets remain focused on Federal Reserve speakers after minutes from July’s FOMC meeting showed Fed officials agreed on the need to eventually slow their tightening cycle. Yet they must first see how their rate hikes affect inflation.
Next week, all eyes are on Fed Chairman Jerome Powell’s “economic outlook” speech at the 2022 Jackson Hole Economic Policy Symposium, which is scheduled for Friday morning.
“All eyes are on the Jackson Hole symposium. Powell’s remarks for next week are one of the main avenues the Fed could use against the market starting in a rate cut cycle next year after tightening this year. We believe market expectations are inconsistent with the Fed’s inflation targeting mandate. Expect rates to remain high and undermine precious metals interest,” said Daniel Ghali, commodities strategist at TD Securities, to Kitco News.
Results from Kitco’s weekly gold survey revealed that Wall Street is now bearish on gold prices next week. Of 11 analysts taking part in the survey, 55% expect prices to fall, 27% are neutral and only 18% call for prices to rise.
The Main Street side remained bullish for the next week. Of 709 participating retailers, 46% expected higher prices, 35% called for lower prices and 19% were neutral, Kitco’s survey showed.
The technical chart remains bearish in the near term, said Kitco senior analyst Jim Wyckoff.
“The next short-term downside price objective for Bears is to push futures prices below strong technical support at $1,725.00. First resistance is seen at the overnight high of $1,762.70 , then to Thursday’s high at $1,775.90,” Wyckoff said.
This week’s decline below the $1,800 an ounce level has put the bulls on hold, Moor Analytics founder Michael Moor told Kitco News.
“The trade above $1,786.3-8.3 will warn of strength,” Moor added. “A maintained lower gap on Monday will leave a fairly large bearish reversal above that will warn of pressure for days/weeks.”
Selling the rallies would be an approach to trading gold for now, according to Alliance Financial precious metals trader Frank McGee, who forecasts lower prices next week.
“[Gold] can’t fight a higher interest rate environment as Fed rates rise and QT starts to settle,” McGee said.
Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. This is not a solicitation to trade commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for loss and/or damage resulting from the use of this publication.