The gold market ended last week, retaining most of this month's gains. But prices may decline in the short term. According to the latest weekly gold survey, sentiment among Wall Street analysts and retail investors have only a slight bullish bias.
However, some analysts say that after gold's nearly 11% rise in the past three weeks, with prices approaching the $1,800 mark, some consolidation would be healthy.
Sean Lusk, co-director of commercial hedging at Walsh Trading, said that gold prices could decline this week as he expects the Federal Reserve to continue aggressively raising interest rates.
"At the end of the day, inflation remains high, so the Federal Reserve is not done raising interest rates," he said.
Lusk also added that investors should continue to pay attention to the long-term outlook. According to him, gold and silver will look attractive as rising interest rates push the US economy into recession.
"I would look to buy the dips on this correction, but not aggressively, because we just don't know what the Fed will do," he said. "Investors have to ask themselves, with a recession coming, do you want to hold equities or a safe haven asset like gold."
Phillip Streible, chief market strategist at Blue Line Futures, had the same opinion as Sean Lusk. He is also bearish and looks to buy gold at lower prices.
"I think you just need to be patient," he said. "The Fed's job is not done yet."
Streible noted that the inverted yield curve between two-year and 10-year bonds continues to widen, suggesting that the US economy is potentially heading into a severe and prolonged recession.
Last week, 20 Wall Street analysts took part in a gold price survey. Among the participants, eight analysts, or 40%, called for higher prices this week. At the same time, seven analysts, or 35%, were bearish in the short term, while five analysts, or 25%, were neutral.
Meanwhile, 495 votes were cast in online Main Street polls. Of these, 221 respondents, or 45%, expect gold to rise this week. Another 177 voters, or 36%, said the price would go down, while 97 voters, or 20%, were neutral.
The sentiment of retail investors has declined sharply since last week, while interest in the precious metal has also declined looking at the low participation rate in the online surveys.
The change in sentiment is due to the fact that gold prices fell by almost 1% at the end of the week. However, after falling to a two-year low in early November, gold prices rose by more than 8%.
Some analysts say a renewed rise in the U.S. dollar, backed by hawkish comments from Federal Reserve members, could put pressure on prices.
