(Kitco News) - The gold market is seeing a resurgence of positive sentiment as a strong majority of retail investors and market professionals expect to see higher prices in the near term, according to the Kitco News Wall Street vs. Main Street Gold Survey.
Despite some brief selling pressure, June Comex gold futures are holding on to recent gains, preparing to end the week up more than 1.6%. June gold last traded at $1,242.40 an ounce, up $4.90 on the session.
In the near term, according to the new surge in market sentiment, there are expectations that gold could test the top end of its current range at $1,250.
Not only is sentiment higher but participation more double from the previous week. This week 1,287 people participated in Kitco’s online and Twitter gold surveys. Of those, 1035 voters, or 80%, said they expect to see higher prices next week; at the same time, 162 people, or 13%, said they expect to see lower prices next week; and 90 people, or 7%, are neutral on the market.
Last week out of 603 participants, 60% said they were bullish on gold in the near term.
Another interesting surprise in sentiment is from market professions, who are now mostly bullish on gold after being bearish the previous week. Out of 36 market experts contacted, 15 responded, of which nine professionals, or 60%, said they are bullish on gold. Four professionals, or 27%, said they are bearish, and two analysts, or 13%, are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts. Last week 56% of Wall Street participants were bearish on gold.
One of the reasons investors are bullish on gold in the near term is because prices have managed to hold and attract buyers above key support levels. Greg Harmon, founder of Dragonfly Capital, noted that in the past week gold prices managed to push above both the 20-day and 50-day moving averages.
Mark Leibovits, editor of the VR Gold Letter, agreed that the market’s technical momentum appears to have shifted in favor of higher prices.
“Originally, I was looking for a retracement possibly to $1,180 by mid-April and then up, but gold seems to be back on the move again here,” he said.
Sean Lusk, director of commercial hedging with Walsh Trading, said that conflicting views in the marketplace, whether it is on U.S. dollar strength, equity market prices, direction of the Federal Reserve’s monetary policy or global economic uncertainty, is helping to keep gold prices elevated. He explained that traders don’t want to be caught short below $1,210 but at the same time don’t want to be too long above $1,250.
“The market is waiting for new news and until we get that, markets will remain in a range, but I think we could get the up end of that range,” he said.
Adrian Day, president of Adrian Day Asset Management, said that he is expecting to see prices fall back in the near term but added that there is still a lot of strength in the market.
“A correction from the sharp early-year run-up is to be expected, but so far it’s been shallower than most spring corrections,” he said.
Wall Street
60%
27%VS
Main Street
80%13%
By Neils Christensen of Kitco News; nchristensen@kitco.com
