(Kitco News) - Retail investors and market professionals seemed to have had the same Kool-Aid over Thanksgiving dinner this week as both groups remain optimistic on gold prices next week, according to Kitco’s weekly Wall St. vs. Main St. survey results.
Gold has been under pressure as markets anticipate a U.S. interest rate hike next month and as the U.S. dollar continues to climb. Earlier in the week, February Comex gold futures rose to a high of $1,080.50 an ounce but have since fallen to levels last seen five and half years ago. Friday, gold prices hit a low of $1,051.60 and are currently hovering around that level.
This week, 859 retail investors participated in Kitco’s online survey, and the sentiment turned predominantly positive for gold in the short term. The majority expect gold prices to move higher next week with 670 voters, or 78%, making bullish calls on the metal. The remaining 139 participants, or 16%, see lower prices, while 50 voters, or 6%, are neutral on prices for the week ahead.
Market professionals’ sentiment mirrored that of retails investors as they expect gold prices to move higher on continued weakness. Of the 37 participants contacted, 14 responded, of which 8, or 57%, say prices should move up. The remaining 4, or 29%, are bearish while 2 participants, 14%, are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
The market professionals who were bearish on gold prices said they expect the metal to remain under pressure as traders brace themselves for a rate rise in December.
“Comex gold plumbed $1,051.6 per ounce in early morning dealings falling to a new low relative to U.S. equities - more than a 60% loss in value relative to the S&P 500 since November, 2012,” noted Richard Baker, editor of the Eureka Miner Report, who called for prices to fall next week.
“Equally troubling is gold's continuing slide compared to the Japanese yen. A loss of traction with a devalued currency is a red flag - gold denominated in yen is now only 6% above its 2013 low,” he added.
Colin Cieszynski, senior market strategist at CMC Markets, agreed with Baker and said he could even see gold prices hit $1,000 an ounce before “bottoming out.”
“The fundamental driver for another downleg for XAUUSD could be U.S. data or Fedspeak pointing to a Fed interest hike,” he said, adding that as markets await next week’s European Central Bank meeting, he remains bullish on gold in euro terms but bearish in dollar terms.
However, bullish sentiment reigned among market professionals, with some calling for the metal to bounce in the week ahead.
Ralph Preston of Heritage West Financial said that the gold market could have a “tentative double bottom,” and that the geopolitical tensions abroad could support prices.
Ken Morrisson, editor of the newsletter Morrison on the Markets, said he is “encouraged by the continued decline in open interest and the past week's sideways price pattern indicating funds are probably closing out many short-sale positions initiated in recent weeks.”
“I'll stick to a $1,095 target for the week ahead,” he added.
Adam Button of forexlive.com said he expects the ECB to disappoint next week and Fed watchers to get “cold feet,” which should spark short covering in gold.
