05.02.202411:40 Forex Analysis & Reviews: Wall Street bet on a decline in gold prices, while Main Street expects growth

The latest weekly gold survey revealed a clear divergence of opinions between institutional and retail traders: the majority of retail investors expect price growth this week, while two-thirds of Wall Street analysts anticipate a decline.

According to Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, economic data and statements from last week have become alarming signals for the gold market, thus maintaining the risks of further decline. All these factors have strengthened the dollar, putting pressure on the precious metal.

Aslam believes that the crucial level to watch now is the $2,000 price mark, and a drop below it would trigger even greater panic.

James Stanley, senior market strategist at Forex.com, changed his stance from bullish to bearish. According to him, bulls had a chance to overcome the $2,055 resistance, but they were again "unable to push a sustained break through the $2,050-2,082 resistance zone." The absence of rate cuts in March and a strong NFP report could provide enough reasons for bears to attempt testing the zone below $2,000 in 2024.

Mark Leibovit, publisher of the VR Metals/Resource Letter, said he expects a short-term correction below $2,000.

John Weyer, Director of the Commercial Hedge Division at Walsh Trading, shares the same opinion as Leibovit. From his perspective, the gold market has essentially overestimated the trajectory of rates. However, global events play a significant role, so gold cannot experience a significant decline. Most likely, its price will remain close to the $2,000 level per ounce. But once economic data in the U.S. changes, the price could range from $2,150 to $2,200.

According to Adrian Day, President of Adrian Day Asset Management, recent hawkish statements from Fed Chair Jerome Powell and recent jobs report suggest that the Fed may not be able to lower rates at its next meeting in March. Considering the optimism priced into the precious metal regarding short-term growth, this implies that gold may correct.

Colin Cieszynski, chief market strategist at SIA Wealth Management, is bearish this week. "For Gold to break away from USD we would probably need an external event, say something political or war-related, or new problems in the banking sector for example," he said.

Twelve analysts participated in the gold survey. Wall Street sentiments are decisively bearish in the short-term perspective for the precious metal. Only two analysts, or 17%, expect price increases this week, while eight experts, representing 66%, forecast a decline. Another two, making up 17%, believe that the yellow metal will trade sideways for some time.

In an online survey, 123 votes were cast, with a slight majority of Main Street maintaining a bullish sentiment. 66 retail investors, constituting 54%, expect price growth this week. Another 27 individuals, or 22%, predict a decline, while 30 respondents, or 24%, remain neutral.

This week, the focus of the gold market will be on events in the Middle East, as the only important data to be released in the near future are the ISM service sector PMI, and markets will also monitor weekly jobless claims on Thursday.