Gold price won’t recover quickly after Friday’s selloff, says Wall Street

Gold price won’t recover quickly after Friday’s selloff, says Wall Street by Anna Golubova for KitCo News

After a drop below $1,825 an ounce on Friday, gold prices are not likely to recover quickly, at least according to the Wall Street part of the Kitco gold survey.

Gold saw a lot of pressure at the end of the week as a selloff in equities created a panic in the metals markets on Friday, analysts told Kitco News. On top of that, a surge in the U.S. dollar index made things worse for gold in the near-term.

“The market is sorting through the fallout of stimulus, inflation worries, and a U.S. dollar rebound. It will take some time before gold starts to climb again,” said Adam Button, chief market strategist at Forexlive.com.

As equities moved down, people began to panic and started selling, said Phillip Streible, chief market strategist at Blue Line Futures. “We could go down below $1,800 and hit $1,795 if the U.S. dollar index keeps going up along with yields,” Streible said.

Wall Street voters, comprised of analysts, were split between gold heading lower and sideways next week, and only the minority saw gold prices heading higher. Breaking down the results, out of 16 Wall Street votes, 37.5% saw lower prices, 37.5% were neutral, and 25% were bullish for next week.

Analysts also cited a bear flag pattern developing, which is a sign that more losses could be ahead. “An ominous bear flag pattern has formed on the daily bar chart, [which is why] I am steady-to-lower next week,” said Jim Wyckoff, Kitco’s senior analyst.

The same worries were not reflected in the Main Street part of the survey as a clear majority still saw prices heading higher next week. Out of 1,701 votes, 54.4% saw higher prices, 21.9% were neutral, and 23.7% saw lower prices next week.

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