(Kitco News) - Despite higher volatility and lower prices in the gold market, retail investors and market professionals remain optimistic that prices will continue to make gains in the near term, according the Kitco News Wall Street vs. Main Street Gold Survey.
Positive economic news Friday is taking its toll on gold prices as the market prepares to end the week done around 1%, the second consecutive negative weekly close. April Comex gold futures last traded at $1,214 an ounce.
This week, 1,428 people participated in Kitco’s online survey, of which 1,111 participants, or 78%, said they are bullish on gold next week. Sentiment was slightly higher compared to last week, which saw 71% bullish on the yellow metal. At the same time, 212 people, or 15%, said they are bearish on gold next week, and 105 people, or 7%, are neutral.
A majority of market analysts also expect gold prices to move higher in the near term. Out of 34 market experts contacted, 18 responded, of which 10, or 56%, said they expect to see higher prices next week. Five professionals, or 28%, said they see lower prices, and three analysts, or 17%, are neutral on the market. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
Although sentiment is still relatively positive for gold as prices have managed to hold support above $1,200 an ounce, momentum is starting to wane among market professionals.
Darin Newsom, senior technical analyst at Telvent DTN, said that he is cautiously optimistic -- “with an emphasis on cautiously” -- that gold still has room to make a new high at the start of a new trading month.
“From a technical point of view, money is coming back and a long-term uptrend is developing,” he said.
However, he added that U.S. dollar strength could be a hurdle for gold as it rallies on positive economic data.
“The U.S. continues to prove that it is the best of the worst and that will support the U.S. dollar. If the U.S. dollar breaks out of its current range, then it will be difficult for gold to rally,” he said.
Adrian Day, president of Adrian Day Asset Management, said that he sees one more week of gains in the gold market.
“Gold has been the best-performing major asset or market this year, with January the best month in a year, followed by the best February ever. Surely we can’t expect it to just keep going up, so gold will likely encounter the ‘PDAC curse’ and see a pullback in March.”
Historically, gold prices and shares of mining companies decline following North America’s biggest mining conference, organized by the Prospectors & Developers Association of Canada (PDAC), which runs from March 6 to 9 in Toronto, Canada.
However, other analysts cite better-than-expected economic data, like fourth-quarter preliminary gross domestic product rising 1% and core personal consumption expenditures, the Fed’s measure of inflation, rising 0.3% in January to 1.7%.
“I think we could be at the end of the fear trade and because gold came up so fast, I could see it come back down again,” said Colin Cieszynski, senior analyst at CMC markets, “Rising inflation could put a March rate hike back on the table.”
Of course, a short-term price drop could be seen as a strong buying opportunity as gold appears to be starting a new long-term uptrend, Cieszynski added.
Wall Street
56%
28%VS
Main Street
78%15%
By Neils Christensen of Kitco News; nchristensen@kitco.com
Follow me on Twitter @neils_C
