(Kitco News) - Market professionals and retail investors are bullish on gold for next week, according to the latest results of the Kitco News Wall Street vs. Main Street gold survey.
Wall Street
62%
14%VS
Main Street
74%16%Twenty-one analysts and traders took part in a survey for market professionals. Thirteen, or 62%, said they were bullish. Only three, or 14%, were bearish, while another five, or 24%, were neutral.
Meanwhile, this week’s Kitco’s online and Twitter surveys received combined 852 votes. A total of 633 respondents, or 74%, said they were bullish for the week ahead, while only 138, or 16%, were bearish. The neutral votes totaled 81, or 10%.
In last week’s survey, 57% of market professionals and 51% of retail investors were bullish. They were right. As of noon EDT, August gold was higher by $30.60, or 2.2%, for the week to $1,273.50 an ounce.
“It's hard to imagine a more favorable environment for higher gold prices near term -- global bond yields at record lows, Brexit uncertainty, global growth downgrades and U.S. election turmoil,” said Richard Baker, editor of the Eureka Miner Report. About the only negative is gold’s performance against the Japanese yen, he said. “My vote is up. Target for next week $1,290 per troy ounce.”
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, commented that gold has shown “extraordinary resilience,” especially considering the calendar is in a traditionally weak seasonal period for the precious metal.
“After the run-up of the last 10 days, gold likely needs additional impetus to continue the move in the immediate term,” Day said. “But the tide has definitely turned in gold’s favor, and has now moved sharply after the 50-day moving average. So though we may be cautious in chasing gold at this point, I’ll say ‘up’ for next week.”
Charlie Nedoss, senior market strategist with LaSalle Futures Group, cited an improved technical-chart picture. The market broke up through the 20-day moving average this week, which previously acted as resistance for several days but has emerged as good support this week, and there also have been a couple of closes above the 50-day average, he pointed out.
“I think we make a run towards highs in the $1,290 area next week,” he said. “There are a lot of suspects – the usual uncertainty over Europe, uncertainty over the election here, stocks have still failed to put in a new high and are on the ropes (so far) today. And then the technicals just look good.”
Mark Leibovit, chief market strategist with VR Trader, also described himself as bullish, citing expectations that the Federal Open Market Committee will not raise interest rates at a meeting next week, plus uncertainty ahead of a U.K. vote on leaving European Union later this month.
Dan Pavilonis, senior commodity broker with RJO Futures, and Kevin Grady, president of Phoenix Futures and Options, both look for higher gold amid negative interest rates in parts of the world.
“I think interest rates are going to go further and further negative and causing a flight to quality in the metals markets…more specifically gold and silver,” Pavilonis said.
Grady pointed out that yields on 10-year German government bonds hit historic lows. “All across Europe, you’re seeing the lowest rates you’ve seen in a very long time. I think a lot of Europeans are buying gold. A low interest-rate environment does bode well for gold.”
Grady added that open interest in Comex gold – the number of open positions at the end of the business day – declined by some 100,000 lots during a recent correction on long liquidation. Now, many of those participants may be looking to return to the market, he added.
Meanwhile, Colin Cieszynski, chief market analyst in Canada for CMC Markets, described himself as neutral at the moment ahead of the FOMC meeting.
“Truth is, I think gold may have a big move but I'm not sure which direction, maybe both,” he said. “It depends on whether the FOMC signals a July rate hike or not. A hawkish fed could boost USD (the U.S. dollar) and send gold back down; a dovish Fed could boost gold and crush USD.”
Meanwhile, Ken Morrison, editor of the newsletter Morrison on the Markets, is “moderately bearish” for the week ahead, suggesting potential for a pullback to $1,250 to $1,245.
“Gold having rallied back into resistance is likely to stall given strength in the dollar has resumed,” he said in an e-mail. “It's interesting open interest in the dollar index futures has risen @ 20% on the recent rally, perhaps indicating an expectation the FOMC may have a more hawkish tone than expected.”
Ralph Preston, principal with Heritage West Financial, also looks for prices to pull back, commenting that gold would “need to close above $1,281 in order to be poised for a run on the May high.” As of this survey, the market was holding below this.
By Allen Sykora of Kitco News; asykora@kitco.com
