Categories: Analysis

Market Sentiment Shows Gold Price Needs Consolidation After Rising Above $2,000

As Bitcoin climbs to new highs, investors are turning their attention to other cryptocurrencies. One of the most promising is Ethereum, which has seen its value rise by 400% in 2018 alone. Despite this growth, some experts believe that gold may be a safer haven for investors as it remains more stable than volatility-prone cryptocurrency markets.

The “what did gold close at today” is a sentiment indicator that shows how bullish or bearish the market is. The sentiment for the markets has been very positive in recent weeks, but it needs to consolidate soon.

Given the present market volatility, experts believe gold will need to stabilize following its recent rally in order to test its all-time highs in the coming weeks. The price of gold has risen beyond $2,000, and many analysts feel this is the start of a long-term trend.

Despite the fact that Wall Street experts’ opinion has softened in the near term, bulls are confident that the upward trend will continue. According to recent polls, there is no apparent consensus among market analysts and professionals on the near-term price direction. Similarly, optimistic sentiment among individual investors has fallen from recent highs.

While most experts believe gold will continue to rise, they believe its recent surge to a new all-time intraday high around $2,000 per ounce is an indication that it has been overextended and is due for a consolidation period.

Philip Streible, the chief market strategist at Blue Line Futures, stated:

“There is no doubt that gold prices are in a positive upswing and will continue to rise, but there must be some consolidation first.” You should avoid chasing the market. I’m aiming to purchase at $1,962 per ounce.”

A poll of 18 Wall Street experts was conducted earlier this week. Eight experts, or 44%, predicted that gold prices will rise in the next week. Simultaneously, three experts (17%) were very pessimistic on gold in the immediate term, while seven (39%) were neutral on the prices.

Meanwhile, 1,013 people voted in online Main Street polls. Six hundred and thirty-four of them (63 percent) anticipate gold will climb in the following week. Another 223 voters (22 percent) believe the price of gold will fall in the near future, while 156 voters (15 percent) are undecided.

Although David Madden, a market analyst at Equiti Capital, is neutral on gold prices in the next week, he does not anticipate any significant upside risks ahead of the Federal Reserve’s monetary policy meeting conclusion on Wednesday.

Madden thinks the markets will anticipate the Federal Reserve to hike interest rates six times in 2022; nevertheless, Russia’s conflict with Ukraine is causing a lot of economic uncertainty, and increasing commodity prices are raising inflation concerns. Any indication that the US central bank would be less aggressive with its monetary policies might be beneficial to gold, he noted.

He made the following observation:

“It’s a foregone conclusion that the Fed will increase interest rates. But it’s possible they’ll announce four rate rises this year rather than the six investors expect. With the protracted situation in Ukraine, the Fed will not speed rate rises.”

The US may be turbulent around the Fed meeting, but inflation is high in general, and the global financial/political environment remains very unpredictable, all of which have historically been tailwinds for gold (gold).

Colin Cieszynski, chief market strategist at SIA Wealth Management, indicated that he is also closely following the US Federal Reserve’s monetary policy meeting, and that he anticipates some volatility in the US dollar and, as a result, in gold prices.

Cieszynski added that he is still positive on gold for the next week, despite the potential for turbulence. He explained:

“Overall, inflation is still high, and the global political/financial environment is still turbulent, both of which have traditionally been gold tailwinds.”

The president of Adrian Day Asset Management, Adrian Day, stated that he anticipates the current conflict in Eastern Europe to continue to support gold at higher prices. He made the following observation:

“The battle in Ukraine is far from ended, and the situation may worsen before it improves.”

Nonetheless, some experts believe that gold’s current consolidation phase will result in lower prices. Darin Newsom, the president of Darin Newsom Analysis, says that gold’s short-term downside targets are between $1,964.90 and $1,929.70.

Marc Chandler, managing director of Bannockburn Global Forex, predicts lower gold prices in the next week as momentum indications become negative.