(Kitco News) - The gold market could remain volatile in the near term as sentiment remains at odds between retail investors and market professionals, according to the Kitco News Wall Street vs. Main Street Gold Survey.
June Comex gold futures saws a big swing this week as dovish comments from Fed Chair Janet Yellen pushed prices to a high of $1,246.80 an ounce; however, the market was unable to hold the gains as better-than-expected data Friday -- including an employment report that showed 215,000 jobs were created in March -- are pushing prices to close the week in neutral territory.
Looking ahead, there doesn’t appear to be a clear direction for gold as retail investors and market professionals are on different sides of the market, for the second straight week.
According to Kitco News’ online survey, positive sentiment among Main Street investors is higher with a clear majority bullish on prices in the near term. This week, 603 participated in an online and Twitter poll. Of those, 364, or 60%, said they expect to see higher prices next week; at the same time, 112 people, or 27%, said they expect to see lower prices next week; and 46 people, or 13%, are neutral on the market.
The results among Main Street participants were a marked improvement from the previous week, where only 46% of voters said they were bullish on gold.
The outlook among market professionals is more dismal with a majority bearish on the market in the near term. Out of 35 market experts contacted, 18 responded, of which only five professionals, or 28%, said they are bullish on gold. Ten professionals, or 56%, said they are bearish, and three analysts, or 217%, are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
Jeffrey Nichols, senior economic advisor at Rosland Capital and managing director at American Precious Metals Advisors, described Friday’s price action as an “April Fool’s selloff,” and added that despite lower prices, gold’s technical picture remains positive.
“In addition to firm technical support under the market, physical demand has also been strong — and should continue to be — especially in the retail sector where global demand for bullion coins and small bars will continue to respond positively to any further price weakness,” he said in an email to Kitco News. “I expect gold to recover in the week ahead, setting the stage for the next leg up.”
Adrian Day, president of Adrian Day Asset Management, agreed that the fundamentals for gold remain strong and he said that he expects to see new buying emerge on these lower prices.
“There’s a lot of money on the sidelines waiting, and that suggests pullbacks will continue to be short,” he said.
However, on the bearish side, some analysts note that improving economic data could continue to put pressure on gold as it supports the Federal Reserve hiking interest rates as early as June. Others see more weakness as the market continues to lose technical momentum.
“Technically, gold had a mild counter-trend rally off the $1,210 area but failed to move above the recent highs. I would expect gold to break $1,200 on this trip down and could trade to $1,190 or lower by the end of next week,” said Ken Morrison, editor of the newsletter Morrison on The Markets.
Wall Street
28%
56%VS
Main Street
60%27%
By Neils Christensen of Kitco News; nchristensen@kitco.com
Follow me on Twitter @neils_C
