Kelvin Testimony Amachree
Gold has experienced a remarkable rise this year, growing by 15.52% year-to-date and standing out as one of the top-performing commodities in the market. The precious metal has consistently set new highs every month, reaching new peaks in the charts. A variety of investors, including retail investors, institutional funds, and central banks of developing nations, have all invested in gold, contributing to its upward trend. Despite this, Wall Street analysts are now predicting a downturn in gold prices, suggesting that the rally may be reaching its end.
Gold prices were around the $2,340 mark on Tuesday according to the XAU/USD chart. Most investors who entered the gold market earlier in the year are currently in profit, with the metal hitting a record high of $2,450 this month before experiencing some profit-taking. Institutional funds engaged in selling off their holdings, leading to a drop in gold prices to the $2,340 level this week. The big question now is whether gold will persist in its upward movement or decline further.
Gold prices saw a slight increase on Tuesday, rebounding from the two-week lows of $2,325, thanks to a weaker US Dollar and safe-haven interests amid ongoing tensions in the Middle East. Notwithstanding this, gold prices defied the bearish trend following a breakdown from a rising wedge on Monday, supported by a positive change in the 14-day Relative Strength Index (RSI) above the 50 mark. However, further increases depend on breaching the barrier-turned-resistance at $2,365 on a daily closing basis.
If buyers manage to regain control above this point, a new advance toward the May 24 high of $2,384 might occur. The next hurdle would be at the $2,400 level. Conversely, sellers need to break the 50-day SMA support at $2,317 to resume the downward trend. The subsequent support level lies at $2,300, below which the May 3 low of $2,277 could be tested. Only time will reveal whether gold will sustain its upward trend or yield to the bearish sentiment on Wall Street.
Wall Street Anticipates Potential Gold Price Dips
Gold price predictions from Wall Street display a bearish perspective, with only a minority of analysts foreseeing further increases. Out of 14 analysts, just three predict an upward movement while the majority expect a decrease in gold prices this year.
Marc Chandler, MD of Bannockburn Global Forex, shared his views on the gold market, suggesting that any rise in gold prices might face initial challenges at $2,375. Chandler highlighted that a strong dollar and rising interest rates triggered a significant sell-off, leading to a drop in gold prices to nearly $2,325.
Chandler pointed out support levels for gold in the $2,275-$2,300 range. He also mentioned reports indicating decreased Chinese demand, which could impact gold prices. With a lighter data calendar expected in the upcoming week, Chandler foresees consolidation in the gold market. He also highlighted the recovery of the US two-year yield from 4.70% to close to 5%, suggesting that the 5% range might be a critical point.
In general, Wall Street analysts hold a consensus that gold prices may find it challenging to sustain their current momentum and are likely to decline soon. Despite some analysts predicting a possible increase, the majority foresee a bearish outlook for gold.