(Kitco News) - Gold will likely trade sideways to lower until the September Federal Reserve meeting is out of the way, that seems to be the predominant sentiment among Wall Street experts based on the latest results of the Kitco News weekly Gold Survey.
Wall Street
27%
46%VS
Main Street
66%20%After hitting three-week highs, gold futures are weaker Friday as a stronger U.S. dollar continues to pressure the metal. The dollar is getting a boost from increased expectations of a rate hike this month, which markets are now pricing in between 24-27%. December Comex gold futures last traded at $1,337, down 0.35% on the day.
According to Kitco’s professional survey, more analyst expect prices to remain under pressure in the near-term while remaining optimistic for higher prices over the long haul. This week, 15 analysts and traders took part in the survey; about 46% of the experts expect prices to trek lower next week, while the remaining participants – split evenly at 27% – see higher or neutral prices.
Meanwhile, sentiment on Main Street was a little more optimistic for the yellow metal. This week, 664 Main Street participants voted on the online survey, of which 438 voters, or 66%, are bullish. At the same time, 136 participants, 20%, expect lower prices while 87, or 13%, are neutral.
“Fed fears will keep gold range bound as investors buy puts at $1,300 and calls at $1,350,” noted George Gero, managing director for RBC Wealth Management. “I think we are going to see this back and forth right up until Sept. 21.”
Ken Morrison, editor of Morrison on the Markets newsletter, focused his attention on the U.S. dollar when making his bearish call this week.
“The dollar and gold continue their love-hate relationship and with the dollar’s successful uptrend support, it doesn't bode well for Gold,” he said. “Open interest has risen recently, indicating new short-selling in gold may be gaining the upper hand.”
From a technical standpoint, some analysts said that gold should move lower after having tested the high end of its range this week.
“Prices need to close over $1,358 today in order to hint a move to $1,392. Until then, I’m looking for continued testing of support,” said Ralph Preston of Heritage West Financial.
Morrison added that he could see the yellow metal retesting support at $1,320, or even $1,310 next week.
However, not all analysts were negative on the metal, with Henry To of CB Capital Partners noting that gold’s year-to-date rally isn’t over.
“[T]raders begin to realize that the Fed will likely wait until its December 14 meeting to implement its second rate hike for this cycle,” he said. “A Fed rate hike delay to December will give provide significant breathing room for Chinese policymakers as it will discourage the further Chinese FOREX outflows and provide impetus for the People’s Bank of China to ease monetary policy, likely early next year. More easing by the world’s central banks will support the price of gold in the long-run.”
By Sarah Benali of Kitco News; sbenali@kitco.com
