FX.co ★ Short-term outlook for gold remains bleak

The short-term outlook for gold remains bleak, with analysts overwhelmingly bearish on the precious metal as the $1,650 an ounce level was broken on Friday.

The precious metal is down nearly $90 from its October high. The overall technical picture is rather bearish.

The main reason complicating the situation with gold is higher than expected inflation, forcing the market to reprice the aggressive expectations of the Federal Reserve's interest rate hike. And this gives the US dollar an additional boost.

The results of the weekly survey on gold showed that Wall Street is extremely negative about gold prices this week. Of the nine analysts who took part in the survey, 78% said they expect prices to drop, and only 22% are optimistic. There were no voices expecting lateral movement.

The main street side remained bullish, but the bearish segment grew. The survey showed that out of 858 retail participants, 45% expected a price increase, 35% called for a reduction, and 20% remained neutral.

Reassessment of Fed rate hike expectations

The holding of the US dollar near a 20-year high is driven by expectations of a 99.7% chance of another 75 basis point rise in November and a 74% chance of another 50 basis point rise in December, and possibly a series of small rate hikes in February and March, according to the CME FedWatch Tool.

As long as such a macro environment exists, gold will be under pressure.