Wall Street turns bearish on gold prices, warns of volatility ahead of Jackson Hole

Wall Street turns bearish on gold prices, warns of volatility ahead of Jackson Hole

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(Kitco News) – With gold ending the week down 3%, Wall Street will be negative on gold next week, blaming a strong US dollar and pressures from the upcoming Jackson Hole Symposium.

Gold eased under pressure from the greenback on Friday as the US dollar index surged to 20-year highs. Comex December gold futures last traded at $1,763.10, down 3% on the week.

Markets remain focused on Federal Reserve speakers after July FOMC minutes showed Fed officials agree on the need to eventually slow their tightening cycle. Still, they first need to see how their rate hikes affect inflation.

All eyes will be on Fed Chair Jerome Powell’s “Economic Outlook” speech at the 2022 Economic Policy Symposium in Jackson Hole next week, scheduled for Friday morning.

“All eyes are on the Jackson Hole Symposium. Powell’s comments for next week are one of the key avenues the Fed could use against the market to price in a rate-cutting cycle next year after this year’s tightening. We believe market expectations are inconsistent with expecting interest rates to remain elevated and weakening interest in precious metals,” Daniel Ghali, commodity strategist at TD Securities, told Kitco News.

poll results

Kitco’s weekly gold poll results showed that Wall Street is now bearish on gold prices for the next week. Of the 11 analysts who took part in the survey, 55% expect prices to fall, 27% are neutral and only 18% expect prices to rise.

The Main Street side remained bullish for next week. Of 709 retail respondents, 46% predicted higher prices, 35% called for lower prices, and 19% were neutral, Kitco’s survey showed.

key driver

The technical picture remains bearish near-term, said Jim Wyckoff, a senior analyst at Kitco.

“The bears’ next short-term downside target is to push futures prices below the solid technical support at $1,725.00. Initial resistance is seen at the overnight high of $1,762.70 and then Thursday’s high of $1,775.90,” Wyckoff said.

This week’s drop below $1,800 an ounce has put the bulls on hold, Moor Analytics founder Michael Moor told Kitco News.

“A trade above $1,786.3-8.3 will warn of strength,” added Moor. “A sustained gap to the downside on Monday leaves a fairly sizeable bearish reversal above that will warn of pressure for days/weeks to come.”

Selling off the rallies would be an approach for gold trading right now, according to Alliance Financial precious metals trader Frank McGee, who is forecasting lower prices next week.

“[Gold] can’t fight a higher interest rate environment when the Fed rate goes up and QT starts to take hold,” McGee said.

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