(Kitco News) - Market professionals and retail investors are solidly bullish on gold for next week, according to the results of the Kitco News Wall Street vs. Main Street gold survey.
Wall Street
65%
17%VS
Main Street
80%13%Twenty-three analysts and traders took part in a survey of market professionals. Fifteen, or 65%, said they were bullish. The bearish and neutral camps both received four votes, or 17%.
Meanwhile, this week’s Kitco’s online survey received 852 votes. A total of 683 respondents, or 80%, said they were bullish for the week ahead, while 115, or 13%, were bearish. The neutral votes totaled 54, or 6%.
(In both surveys, the percentage totals do not add up to 100% due to the effect of rounding off numbers.)
In last week’s survey, 62% of market professionals and 74% of retail investors were bullish. This was the second straight week both camps looked for higher prices, and once again they were right. As of 11:25 a.m. EDT, Comex August gold was higher by $14.40, or 1.1%, for the week to $1,290.30 an ounce.
How gold ultimately fares next week may well hinge on Thursday’s U.K. vote on whether to remain in European Union, with most polls showing a difference of only a few percentage points between the two sides. A so-called Brexit is generally seen as gold-supportive, and vice-versa.
This uncertainty left several survey participants neutral for now.
“I’m in a bit of a conundrum about which way to go for next week again,” said Colin Cieszynski, chief market analyst in Canada for CMC Markets. “I think depending on what happens with Brexit, we could see huge swings in gold in both directions, but it's a total crapshoot as to which way gold could end up going by the end of the week -- in other words a repeat of this week but potentially even more volatile. So I’m going neutral but noting that it’s likely going to be a huge week for trading gold, and traders need to be ready for action in both directions with the potential for more big swings and more big reversals.”
Erica Rannestad, senior analyst with the GFMS team of Thomson Reuters, is also neutral, commenting that she looks for gold prices to see some upside in the first half of the week but then scope for profit-taking in the latter half.
“With the referendum on the 23rd, I think we could see further support for gold as the market anticipates the outcome of the referendum,” she said. “Once an outcome is realized, unless it’s viewed as a surprise, I think we can see gold come off. That said, I will go with unchanged, given the diverting trend within the period, as I’m uncertain what the magnitude of the increase and decline could be.”
Nevertheless, the majority say they see prices rising again.
“There is enough going on in the world that we make another run at $1,300,” says Charlie Nedoss, senior market strategist with LaSalle Futures Group, also citing the metal’s ability to hold above some of the widely followed moving averages.
Phil Flynn, senior market analyst with at Price Futures Group, looks for gold to rise even if the U.K. ends up staying in EU. He sees a potential dip early in the week, followed by a rise heading into the Thursday U.K. referendum, then a limited pullback should Brexit fail.
“The long-term technicals look solid,” Flynn said, particularly with gold’s temporary rise back above $1,300 this week. “There are other fundamentals bullish for gold, like low interest rates and general concerns about the global economy.”
George Gero, managing director with RBC Wealth Management, looks for higher prices as we “start going back to the basics” once the Brexit vote is out of the way, with the market focusing on factors such as the economy, Federal Reserve and moves in interest rates.
Kevin Grady, president of Phoenix Futures and Options LLC, also looks for the metal to rise again, pointing out that exchange-traded-fund holdings are holding up.
“I still look at the ETF holdings as the real investment demand in the market,” Grady said. “They have not gone down. We had maybe one small down day (for ETF holdings) in all of May, when gold (futures) lost 100,000 contracts….I think there is a very good chance they (U.K. voters) leave the EU. That would propel gold.”
Still, some observers anticipate some kind of pullback. Ralph Preston, principal with Heritage West Financial, suspects that the dollar index will eventually surge up through the 100 level, thereby sending gold lower.
By Allen Sykora of Kitco News; asykora@kitco.com
