(Kitco News) - Wall Street’s gold sentiment seems to have taken a 180-degree turn, with a majority of analysts now expecting prices to move higher next week after the release of data Friday showing U.S. employment grew less than expected.
Wall Street
62%
15%VS
Main Street
57%29%Despite trading weaker for the better part of the week, gold is looking to end in the green Friday. Gold futures popped in the aftermath of the softer nonfarm payrolls report, which showed the U.S. economy created 151,000 jobs in August. December Comex gold last traded up $7.80 at $1,325 an ounce.
Thirteen analysts and traders took part in the weekly Kitco News Wall Street survey, of which eight participants, or 62%, called for higher gold prices. Last week, nearly half of the experts surveyed were expecting lower gold prices. This week, only two voters, or 15%, are bearish, while three, or 23%, are neutral.
Meanwhile, 1,091 Main Street participants voted on this week’s online survey. A total of 626 respondents, or 57%, said they were bullish for the week ahead, while 311, or 29%, were bearish. The neutral votes totaled 154, or 14%.
Analysts are mostly bullish on the yellow metal as higher interest-rate expectations might have been a bit exaggerated prior to the jobs report. Following last week’s Fed comments, markets were considering the option that the central bank would hike rates this month; however, in the immediate aftermath of the weak employment data, the probability fell to 12% for September, from the prior day’s reading of 24%.
“Gold futures should continue to benefit after the miss on the jobs number on Friday,” noted Phil Streible, senior market strategist for RJO Futures. “The number a far cry from 180,000 expected, leaving the most likely scenario being one interest rate hike closer to the December meeting.”
Adrian Day of Adrian Day Asset Management agreed with Streible in that Friday’s nonfarm payrolls report will prompt the Fed to “remain cautious” and make officials “reluctant” to raise interest rates this month.
However, not all analysts were taken by the weak jobs hype, with some even suggesting that gold may move lower from here.
“$1,362 now represents massive resistance. The top may very well be in for the year,” noted less-optimistic Ralph Preston, principal with Heritage West Financial.
Ken Morrison, editor of the newsletter Morrison on the Markets, on the other hand remains neutral on the yellow metal, “expecting a sideways consolidation within a $1,310-$1,340 trading range.”
One expert even suggested gold would need to close above $1,325 an ounce Friday if it wants to keep the momentum going into next week.
By Sarah Benali of Kitco News; sbenali@kitco.com
