(Kitco News) - A slight majority of the respondents to the weekly Kitco News gold survey look for the precious metal to keep working its way higher next week.
Wall Street
53%
24%VS
Main Street
54%28%Seventeen analysts and traders took part this week’s Wall Street poll. Nine participants, or 53%, called for gold to rise next week. The other eight votes were evenly split between sideways and lower, with four, or 24%, for each camp.
Meanwhile, 853 Main Street participants submitted votes in an online survey. A total of 464 respondents, or 54%, said they were bullish for the week ahead, while 239, or 28%, were bearish. The neutral votes totaled 150, or 18%.
Last week, 78% of Wall Street participants expected gold to rise and 57% of Main Street participants were bullish. As of 11:41a.m. EDT, Comex December gold was up from the previous Friday's close by a modest $2.70 for the week to $1,254.60 an ounce.
Ken Morrison, editor of the newsletter Morrison on the Markets, is among those looking for more of a bounce after the September-October selloff.
“The long liquidation that pressured gold from $1,330 appears to have about run its course as futures open interest ticked slightly higher Thursday for the first time in several days,” he said. “Open interest at 500,000 contracts is the smallest since the June low in gold. The dollar remains a headwind but worth noting gold held steady this week despite the rally in the dollar. The market didn't hit my $1,280 target this week, but I'll stay with that in the week ahead.”
Phil Flynn, senior market analyst with at Price Futures Group, looks for gold to benefit from a bounce-back in the British pound from what he described as a 168-year low when adjusted for inflation. The pound selloff on further Brexit news may have been “overdone” and “panicky,” and a recovery should help cap the U.S. dollar, he explained. Flynn also cited ideas that the U.S. Federal Reserve won’t hike interest rates at its November meeting, “giving the market some breathing room to rally” for a while, even though the December meeting remains a possibility for tightening of monetary policy.
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, figures a quarter-point rate hike in December “should surely” be factored into the market by now. “We are not afraid of a quarter point increase!” he said.
Sean Lusk, director of commercial hedging with Walsh Trading, said it appears as if gold “found a near-term bottom,” suggesting technically-oriented buying could be triggered if prices get back above the $1,260 to $1,265 area. While much long liquidation has occurred already, bulls in the futures market still “don’t seem to want to bail,” Lusk adds.
Richard Baker, editor of the Eureka Miner Report, remains “cautiously bullish near term given uncertainties surrounding the U.S. election…and questionable soundness of the European banking system.”
Other positive gold factors he cited include “solid” foreign participation in Thursday’s U.S. 30-year Treasury bond auction; an ongoing normalization with commodity prices rising since September, with key gold ratios reverting to mean trendlines; and a weakening yen. He describes the latter as “encouraging” since the yen often competes with gold for safe-haven status.
Meanwhile, Ralph Preston of Heritage West Financial is among those who see gold lower next week. He cites an expectation for “the U.S. dollar to significantly strengthen on the back of global instability.” Gold tends to move inversely to the U.S. currency.
Kevin Grady, president of Phoenix Futures and Options LLC, described himself as neutral. He cited gains in holdings of the SPDR Gold Shares (GLD) exchange-traded fund lately, which reflects continued investor inflows, even though selling has occurred in the futures market due to a stronger U.S. dollar and worries about a potential Fed rate hike yet this year.
“We’re seeing a lot of shorts (bearish traders) coming into the gold (futures) market,” he said. “But the strength in GLD is going to keep us neutral.”
By Allen Sykora of Kitco News; asykora@kitco.com
