(Kitco News) - Market professionals and retail investors remain bullish on gold for next week, according to the results of the Kitco News Wall Street vs. Main Street gold survey.
Wall Street
73%
14%VS
Main Street
62%27%Basically, they look for a continuation of the gains from Friday, when gold rose as so-called risk markets tumbled in the wake of a vote by U.K. residents to exit the European Union.
Twenty-two analysts and traders took part in a survey of market professionals. Sixteen, or 73%, said they were bullish. The lower and neutral camps each drew three votes, or 14%.
Meanwhile, this week’s Kitco’s online survey received 470 votes. A total of 290 respondents, or 62%, said they were bullish for the week ahead, while 126, or 27%, were bearish. The neutral votes totaled 54, or 11%.
In last week’s survey, 65% of market professionals and 80% of retail investors were bullish. This was the third straight week both camps looked for higher prices, and for the third straight week they were right. Around 11:30 a.m. EDT, Comex August gold was higher by $26.20 for the week to $1,321 an ounce. The market fell back early in the week when polls suggested those opposed to a so-called “Brexit” had a slight lead, but then gold soared sharply Friday when the “leave” camp won instead.
“Gold prices should continue to rise next week as markets digest the uncertainty surrounding the U.K.’s exit from the European Union,” said Henry To, analyst at CB Capital Partners. “The political process will take at least two years to negotiate, but the U.K.’s exit from the European Union may trigger the beginning of the wholesale disintegration of the European Union, and perhaps even of the euro currency as well. Traders are going to start discounting such a scenario even if ultimately policymakers keep everything together. Uncertainty and fear will continue to rise, which should support gold prices next week.”
Daniel Pavilonis, senior commodities broker with RJO Futures, also looks for further gains on ideas that global interest rates will go deeper into negative territory in parts of the world.
“There is going to be a lot of investment in gold as another currency just to get out of the system,” he said. This likely will also lead more speculators into the long side of the gold-futures market, he continued. “I think we can see a scenario where the dollar stays strong but gold continues to move higher too.”
Kitco technical analyst Wyckoff looks for higher gold on “safe-haven demand amid market stresses” around the world.
“Gold has behaved more like a currency than a commodity since March 2015 and it proudly displayed that character post-Brexit vote last night,” said Richard Baker, editor of the Eureka Miner Report. “Touching $1,350-plus levels against a rising dollar, gold posted a new high against the euro (levels not seen since March 2013) and competed positively with the yen for safe-haven status. With all the uncertainty the Brexit result will bring to markets in the coming days, gold's new momentum should carry prices higher than this a.m.’s dealings (Comex currently $1,318).”
Those who look for weakness appear to be mainly looking for a correction after the sharp rise that occurred Friday in the aftermath of the Thursday U.K. referendum.
“I see gold falling over the next week as the over-reaction to the Brexit vote has spurred gold too high,” said Bob Tebbutt, partner at Amour Asset Risk Management.
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, says gold “will likely pull back a little after the post-Brexit surge, but after a test of $1,300 on downside and a consolidation, up again. So we certainly would not try to play any short-term weakness, but use (a) pullback to buy.”
Ken Morrison, editor of the newsletter Morrison on the Markets, is neutral.
“From the current price level as I write of @ $1,316, I'm neutral on the price over the next week,” he said in a late-morning e-mail. “The failure of the market to hold above the 2014 high @ $1,347 indicates we've seen the high in the near term as the $100 spike in overnight trading was most likely a result of short covering that will not be sustained. First support is now $1,300 and a break below that could see a pullback to @ $1,275.”
By Allen Sykora of Kitco News; asykora@kitco.com
