(Kitco News) - Wall Street and Main Street alike look for gold to continue building on its recent recovery next week, based on a pair of Kitco News weekly surveys.
Wall Street
56%
28%VS
Main Street
44%43%Eighteen analysts and traders took part in the Wall Street survey. Ten participants, or 56%, look for gold to be higher next week. Five, or 28%, voted lower, while the remaining three, or 17%, look for the metal to be sideways.
Meanwhile, 544 Main Street participants submitted votes in Kitco.com’s online survey. A total of 237 respondents, or 44%, said they were bullish for the week ahead, while 234, or 43%, were bearish. The neutral votes totaled 73, or 13%.
For the trading week now winding down, 63% of Wall Street and Main Street respondents alike called for gold to rise from the close last week to this week. As of 11:03 a.m. EDT, they were right, as Comex December gold was up by $5 for the week so far to $1,272.70 an ounce, continuing a bounce from a sell-off in late September and early October.
Going back to mid-May, the largest Wall Street voting camp forecast correctly 18 times and was wrong five times, a winning percentage of 78%. Main Street – which voted higher every single time – had a 15-8 mark during this period for 65%.
Colin Cieszynski, chief market analyst in Canada for CMC Markets, is among those bullish on gold for next week.
“To me, USD (the U.S. dollar) is looking overextended and peaking and the catalyst for a correction could be the Fed meeting,” he says. “If they raise (rates), they will be done for a while and if they don’t, they will likely signal a December hike, then go on hold for a while. I think we’ll see two hikes max in the next year, three to Dec. (20)17, and the dollar is currently pricing in more than that. With RSI (the Relative Strength Index) overbought as well, the dollar is due for a correction. Meanwhile, gold continues to steadily recover. It had become really oversold down by $1,250 and is recovering nicely. “
Phil Flynn, senior market analyst at Price Futures Group, also looks for higher prices, commenting “you have to be impressed” with gold’s ability to hold up this week in the face of U.S. dollar strength.
“The physical side seems to be supporting the market,” he said, citing demand during the Indian holiday season. “There is also some more talk that we’re going to see more inflation at some point. Because of the volatility in the bond market and historically low rates, gold is acting as more of an inflation hedge. All of those things put together might bode well for a good rally next week.”
Sean Lusk, director of commercial hedging with Walsh Trading, looks for follow-through to the upside.
“It looks like the lows are in for some time,” he said. “It just seems to me that nobody wants to be consistently short. There are economic headwinds and an election. We probably are not going to take off and go too far to the upside. But there are enough headwinds and geopolitical stuff that the market is going to test some upper highs.”
Henry To, analyst at CB Capital Partners, also sees more gains.
“I see gold continuing its recent recovery for a variety of reasons, such as higher Chinese and Indian gold purchases after dropping during the first three quarters of 2016, as well as the stronger likelihood of higher fiscal deficits after the U.S. presidential election, which will stoke inflation,” he said.
Meanwhile, Ralph Preston, principal with Heritage West Financial, is among those who anticipate a pullback.
“Prices appear to be closing closer to the bottom end of the month of October’s price action. This hints at continued weakness,” Preston said. “Look for a move into the $1,175-$1,215 support zone, if not lower, during the month of November.”
Greg Harmon, founder of Dragonfly Capital, adds, “Until gold pushes above $1,310, the market looks bearish to me.”
Afshin Nabavi, head of trading at trading house MKS (Switzerland) SA, sees a sideways market between roughly $1,260 and $1,275 as market participants await next Friday’s release of U.S. nonfarm payrolls data for October. This is a major report that tends to have a big impact on expectations for U.S. interest rates.
“Nonfarm payrolls next Friday will shed more light on it,” he said.
By Allen Sykora of Kitco News; asykora@kitco.com
