(Kitco News) - Some profit taking in gold Friday has not diminished the metal’s short-term positive outlook as most retail investors and market professionals expect the rally to continue, according to the weekly Kitco News Wall Street vs. Main Street Gold Survey.
Despite a weaker prices Friday, Comex April gold futures are preparing to end their third consecutive week in positive territory, with a gain of more than 3% and holding near a three-month high. April gold last traded at $1,157.2 an ounce, relatively unchanged for the day.
Also for the third consecutive week, positive sentiment remains strong among retail investors, with more than 80% bullish on gold. This week a record 1,417 people participated in Kitco’s online survey. Of those, 1,213 participants, or 86%, are bullish on prices next week; at the same time 134 people, or 9%, are bearish on prices next week; and 70 people, or 5%, are neutral. In the last two previous surveys, 81% of respondents said they were bullish on gold.
Sentiment among market professionals is also positive, albeit not as high compared to the retail side. What is also interesting about this week’s results is that analysts surveyed see the market higher or lower, with no neutral votes cast. Out of 34 market experts contacted, 18 responded, of which 11, or 61%, said they expect to see higher prices next week. At the same time seven professionals, or 39%, said they see lower prices. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
According to analysts, gold benefited greatly from safe-haven flows, as concerns about the U.S. and global economy grip the market. Weaker global growth is expected to keep the Federal Reserve on the sidelines and not raise interest rates at all in 2016. These growing expectations pushed the U.S. dollar lower, to gold’s benefit.
In an email to Kitco News, Bill C. from Pearland, Texas, said that he sees gold as the ultimate safe haven. “Gold in my opinion is one of the few things in the world that is worth its weight. Most currencies in the world are not worth the paper they are printed, the United States included,” he said.
While gold is getting a boost amid economic-growth uncertainty, most analysts are bullish on gold because of the technical progress it has made. Wednesday, for the first time since October, gold prices moved above the 200-day moving average and by Friday had pushed to a high of $1,164 an ounce, the highest price since Oct. 28.
“Gold bulls have technical momentum on their side and U.S. dollar index has turned bearish,” said Jim Wyckoff, senior technical analyst at Kitco.com
It is also interesting to note that while analysts are mostly bullish on gold, their sentiment is not without some reservation.
“I like the price action at the moment and [Wednesday’s] move through $1,135 was the latest bit of good work from the bulls. Sure it could end in tears quickly, but for now I’m backing the bulls,” said Clive Lambert, technical analyst at Futurestechs.
Some analysts say they see gold topping out next week around the $1,180 or even $1,175 levels.
On the bearish side, most of the analysts say that they expect to see a heathy correction for gold next week, after which they expect prices to push higher.
Ken Morrison, editor of Morrison on the Markets, said that he could see gold prices retracing to around $1,130 an ounce. He noted that gold could even fall as far as $1,100 or even 1,080 an ounce and still maintain its current uptrend.
“The pullback I'm expecting near term is unlikely to go to either of those levels,” he said. “I expect gold will have a meaningful correction in the week ahead as the dollar re-sets and stabilizes.”
Wall Street
61%
39%VS
Main Street
86%9%
By Neils Christensen of Kitco News; nchristensen@kitco.com
Follow me on Twitter @neils_C
