Among 17 analysts polled by the Kitco News Survey last weekend, only three, or 18%, expect gold prices to climb this week while 35% foresee a decline and 47% predict the metal will stay flat.
Meanwhile, another online survey of 274 Main Street voters showed 53% betting on higher prices and 23% anticipating a drop.
Main Street refers to small businesses and individual consumers, while Wall Street is used to describe large investment firms and global trading corporations.
Gold saw its biggest drop in 12 years last Wednesday and closed the week lower at US$4,111 per ounce, snapping a nine-week record rally.
Alex Kuptsikevich, senior market analyst at forex broker FxPro, forecast that the slide would continue into this week and could persist even longer. He noted that the current situation resembles 2020, when gold fell for 30 consecutive weeks following a sharp rally.
Rich Checkan, chairman and COO of Asset Strategies International, is more optimistic. He predicted that the precious metal would rebound as last week’s correction had been long anticipated.
“The lower-than-expected (U.S.) CPI, coupled with next week’s anticipated rate cut, should be enough to flip gold back into positive territory,” he told Kitco News.
Gold thrives in low-rate environments as they reduce the opportunity cost of holding non-yielding assets like the yellow metal.
Sean Lusk, co-director of the hedging division at brokerage Walsh Trading, said it is increasingly difficult to predict gold’s price movement. He noted that the metal could drop to $3,690 per ounce but would still remain in an uptrend in the long run. Conversely, if buying pressure returns, gold could target $4,589 per ounce in the December or February futures contracts.
Phillip Streible, chief market strategist at Blue Line Futures, told Reuters: “If (gold prices) fall below $4,000, we’re going to continue to see more of a dramatic washout in the market, perhaps down to $3,850, the next major support level.”
Investors are now looking forward to a series of central bank actions. The Bank of Canada, the U.S.’ Federal Reserve and the Bank of Japan are scheduled to announce their monetary policy decisions on Wednesday. The following day, the European Central Bank will also provide guidance on its policy direction.
Amid the ongoing U.S. government shutdown, no major economic data are expected to be released this week. Without these crucial insights into the U.S. economy, Fed officials would have to set interest rates without the comprehensive data they usually rely on, AFP reported.
