(Kitco News) - After hitting a 15-month high, the gold market is ending the week and month with significant momentum, and strong sentiment could point to continued gains next week, according to the latest Kitco News Wall Street Vs. Main Street Gold Survey.
After hitting a session high of $1,299 an ounce, gold prices are holding on to most of their gains Friday and are preparing to close the week with gains of more than 4.7%, their highest percentage move since early February. With gold’s latest strength, there is strong optimism in the marketplace that prices could surprise $1,300.
Among retail investors, expectations remain strong that gold prices can continue to push higher. This week 827 people participated in Kitco’s online gold survey. Of those, 604 voters, or 73%, said they expect to see higher prices next week; at the same time, 130 people, or 16%, said they expect to see lower prices next week; and 93 people, or 11%, are neutral on the market.
Sentiment is relatively unchanged from the previous survey, when 72% were bullish on prices.
The biggest shift is among market professionals. Last week the bear side had a slight advantage as 44% of participants expected to see lower prices. However, the latest survey shows a strong majority expects higher prices in the near term.
Out of 36 market experts contacted, 21 responded, of which 15 professionals, or 71%, said they are bullish on gold; at the same time five professionals, or 29%, said they are bearish. No analyst was neutral on the market. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
According to comments from market participants, many are bullish on gold as the U.S. dollar is expected to push lower with the Federal Reserve expected to keep interest rates unchanged in its current range between 0.25% and 0.50%.
“With the dollar falling, we are seeing a manic move into gold by those who are short or on the sidelines…,” said Adrian Day, president of Adrian Day Asset Management.
Colin Ciesznski, senior market strategist at CMC Markets, said that along with a weaker U.S. dollar as other currencies catch up due to shifting global monetary policies, he also noted that the technical picture for gold has significantly improved.
“This week’s rally called off a head-and-shoulders top that had been forming, a bullish sign,” he said.
Darin Newsom, senior analyst at Telvent DTN, said that with the latest U.S. dollar weakness, the next major target for gold is $1,330 an ounce.
Although he is bullish on prices in the near and long term, Newsom added that investors should use some caution at these levels.
“A breakout on the last day of the month could be seen as a bearish technical signal as buyers give one last push for the month; however, there are no new sell signals on the weekly chart so I think we could go higher,” he said.
Even the bearish analysts remain optimistic that gold will continue to hold most of its recent gains.
Richard Baker, editor of the Eureka Miner newsletter, said that he could see prices fall back and take a breather next week following the latest rally. But he added that he sees initial support at $1,280 an ounce.
Wall Street
71%
29%VS
Main Street
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By Neils Christensen of Kitco News; nchristensen@kitco.com
