Gold managed to hold critical support above $1,700 despite the US dollar's update of its 20-year high, which means sentiment has improved.
Although gold may rise this week, analysts warn that investors should not expect a significant breakout as the Federal Reserve continues to aggressively raise interest rates. There is currently an 88% chance that the US central bank will raise the federal funds rate by another 75 basis points on September 21st.
Bannockburn Global Forex managing director Mark Chandler said he sees any rally in gold as a short-term correction of the current downward trend.
Last week, 16 market professionals took part in a Wall Street survey. Nine analysts, or 56%, said they are optimistic about gold this week. Two analysts, or 13%, said they were bearish. Five analysts, or 31%, said they were neutral about the precious metal.
In the retail sector, 495 respondents took part in online surveys. A total of 255 voters, or 52%, called for gold to rise. Another 153, or 31%, predicted a fall in gold. While the remaining 87 voters, or 18%, were in favor of a side market.
Optimism among Main Street investors has improved sharply after bearish sentiment hit a multi-year low last week. The resumption of near-term confidence is due to the fact that gold prices are still trading relatively unchanged, breaking a three-week losing streak.
Chris Vecchio, senior market analyst at DailyFX.com, said that despite challenging conditions for gold, market bulls can be confident that the precious metal has managed to create solid support around $1,700.
Many analysts say they are bullish on gold as the US dollar appears to be unable to sustain gains above its recent 20-year high.
Equiti Capital market strategist David Madden said that while gold appears to be stuck in a neutral position above $1,700 an ounce, it has shown some resilience, which could help draw some attention.
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