Sentiment in gold remains strong despite nearly 3% drop this week

NEW YORK (March 18) Gold futures are seeing their worst week since November, but sentiment in the marketplace remains strong as the price continues to hold clear support above $1,900 in an environment of growing uncertainty and volatility.

The latest results of the Kitco News Weekly Gold Survey show broad-based bullish sentiment among Wall Street analysts and Main Street investors.

Sean Lusk, co-director of commercial hedging with Walsh Trading, said that while gold will remain volatile along with all financial markets, it still shines bright as an alternative asset. He added that he sees gold prices push back above $2,000 in the near term.

"There is uncertainty everywhere and the question remains where do funds put their money," he said. "Investors should be buying the dips."

Although Lusk is bullish on gold in the near term, he added that he likes playing gold through the options market because risks are defined.

This week 16 Wall Street analysts participated in Kitco News' gold survey. Among the participants, nine analysts, or 56%, called for gold prices to rise next week. At the same time, four analysts, or 25%, were bearish on gold in the near term, and three analysts, or 19%, were neutral on prices.

Meanwhile, 822 votes were cast in online Main Street polls. Of these, 560 respondents, or 68%, looked for gold to rise next week. Another 147, or 18%, said lower, while 115 voters, or 14%, were neutral in the near term

The bullish sentiment comes as gold prices trade at $1,928.90 an ounce, down 2.8% from last Friday.

Phillip Streible, chief market strategist at Blue Line Futures, said that he likes the idea of buying gold on dips. He added that he remains doubtful that the Federal Reserve will be able to follow its plan to raise interest rates seven times this year.

"The Federal Reserve has said that it will remain data-dependent and if the data doesn't improve then the Fed will have to adjust,"

Sentiment in gold came after the Federal Reserve raised interest rates by 25 basis points and laid out its plan for the rest of the year. The Federal Reserve lowered its growth forecast and raised its inflation expectations for 2022. At the same time, it sees the potential for seven rate hikes.

While the Federal Reserve has embarked on a new tightening cycle, many analysts have said that with inflation pressure steadily rising, real interest rates will remain in negative territory.

Kitco News