Investor Appetite Is Weak: More Pain Awaits Gold Investors!

Gold is licking its wounds around $2,025 as geopolitical tensions in the Middle East escalate further and bets are thinning that the U.S. Federal Reserve will cut interest rates aggressively this year. Meanwhile, according to the latest metals report from Heraeus, U.S. investors' appetite for gold may recover.

Investors' appetite for gold is weak, but that could change!

According to the latest precious metals report from Heraeus, investors' appetite for gold remains weak in the United States. However, it is possible that it will reverse later this year. Analysts include the following assessment in the report:

Globally, investors in gold ETFs reduced their holdings by 8.2 moz last year, mainly from June. The positive sentiment for gold investment in the U.S. appears to have faded as attractive money market yields have come back into focus after the mini-banking crisis in May. This was followed by an influx of negative funds throughout the summer and five consecutive months in the fall.

### Probably the shiny metal will find support when the Fed cuts rates

Analysts say investor sentiment turned positive towards the end of 2023 as markets became more confident that interest rates were peaking and cuts were on the horizon, which pushed the price of gold above $2,000 and all-time highs. However, they note that this is not reflected in the streaming data. In this context, analysts make the following statement:

Gold ETFs have disposed of 897 trump holdings so far in January, continuing the trend from late 2023. Judging by ETF outflows in January, the U.S. Mint's declining sales of physical bullion, and relatively low open interest in futures markets, overall investor sentiment appears to be at odds with record prices. Higher-than-expected inflation in the US last week once again dampened expectations of a rate cut in March. When the Fed cuts interest rates, gold may find support and investors' attitudes may change.

But outside the United States and Europe, the situation is different. Heraeus notes that indicators of China's gold demand are strong.

### Gold price technical analysis: More pain is on the cards!

Market analyst Dhwani Mehta analyzes the technical picture of gold as follows. As you can see on the daily chart, gold price exhibited a symmetrical triangle fakeout on Tuesday. In fact, it confirmed a downside break from the triangle after closing the day below the ascending trendline support at $2,031. Gold sellers stepped in after the 21-day Simple Moving Average (SMA) failed to hold at $2,046.

The yellow metal is challenging the critical 50-day SMA support at $2,021 at the time of writing. If this support fails to sustain, it could fuel a new wave of selling towards the $2,000 level. Prior to that, the round level of $2,010 will likely provide temporary support to gold buyers. Meanwhile, the 14-day Relative Strength Index (RSI) indicator fell further below the midline. That is why the shiny metal has entered a downward trend.

Gold price daily chartAny rebound in the gold price will gain acceptance above the triangle support, which has now turned into resistance at $2,033. The next strong upside barrier stands at $2,046. This level is located at the confluence of the 21-day SMA and triangle resistance. There will be new buying opportunities on here. It will also allow gold to retest the psychological level of $2,050.

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