(Kitco News) - Wall Street and Main Street both look for gold to continue its recent climb next week, based on a pair of Kitco News weekly surveys.
Wall Street
65%
18%VS
Main Street
72%20%Traders and analysts who take part in the Wall Street survey look for gold to climb during the early part of the week on uncertainty about the U.S. presidential election, with some polls showing a difference of only a couple of percentage points between Republican nominee Donald Trump and Democrat Hillary Clinton. After the outcome, they say, gold’s direction may hinge on who wins.
Seventeen market professionals took part in the Wall Street survey. Eleven participants, or 65%, look for gold to be higher next week. Three, or 18%, voted lower, with the same result for sideways. (The total adds up to 101 percentage points due to the effect of rounding).
Meanwhile, 507 Main Street participants submitted votes in either an online or Twitter survey. A total of 363 respondents, or 72%, said they were bullish for the week ahead, while 102, or 20%, were bearish. The neutral votes totaled 42, or 8%.
For the trading week now winding down, 56% of Wall Street respondents and 44% of Main Street participants looked for gold to rise, the largest voting bloc for each. As of 11:47 a.m. EDT, Comex December gold was up by $28.90 for the week so far to $1,305.30 an ounce.
Going back to mid-May, the largest Wall Street voting camp forecast correctly 19 times and was wrong five times, a winning percentage of 79%. Main Street had a 16-8 mark during this period for 67%.
In recent weeks, gold has tended to fare better when it appears Trump gained momentum in the election, and vice-versa.
Peter Hug, global trading director for Kitco Metals, voted this way on gold’s direction next week: “Hillary wins, down. Trump wins, up. I think Hillary wins.”
Sean Lusk, director of commercial hedging with Walsh Trading, anticipates gold strength on election uncertainty, although he cautions that what happens after Tuesday likely will hinge on the results.
“I look to trade higher at least until the election,” he said. “Now if Trump actually wins, I think we’re going a lot higher. If Hillary wins, we’ll probably stay steady or fall back….At the beginning of the week, I think the market is going to stay bid until they know for sure.”
Lusk and Charlie Nedoss, senior market strategist with LaSalle Futures Group, also cited technical factors. Gold is not only back above its 200-day moving average, but has regained its 50-day average, Nedoss pointed out. He also noted that the metal has put in a high and low for the week that were both above last week’s high and low.
“I remain favorable on gold's upside potential with a target at $1,325 in the week ahead,” said Ken Morrison, editor of the newsletter Morrison on the Markets. “The combination of a weakening dollar and uncertainty over the outcome and aftermath of the U.S. election has provided a good backdrop for new longs coming back to the market, as evidenced by the 25,000-contract increase in open interest the past week on the $30 rally.”
Colin Cieszynski, chief market analyst in Canada for CMC Markets, also described himself as bullish, pointing out that the Relative Strength Index reading indicates the market is not yet “overbought” despite recent gains.
“It’s likely going to be a really volatile week for gold around the U.S. election,” he said in an e-mail. “A Trump win (which I think) or a contested vote (maybe, it’s going to be really close) could cause another spike in gold. A Clinton win could deal gold a temporary setback and Trump speculation unwinds, but a new president coming in either way means increased policy uncertainty, which is supportive for gold in the medium term.”
Bob Haberkorn, senior commodities broker with RJO Futures, looks for a sideways market for the week as a whole although with potential for upside early in the week until election results are out of the way.
“After the election, we’ll be back focusing on what the Fed will do, although the market has already factored in a Fed rate increase,” he said. “They seemed to be very committed at their meeting this past week.
“I think into the election and a day or two after the election, we’ll have more upside based on uncertainty of who gets elected. If Trump gets elected, there is the uncertainty about what he will do with the Fed. He is on record of saying he is going to get rid of [Fed Chair] Janet Yellen. If Hillary gets in, the situation will be fairly chaotic going forward because of the legal issues that look like are coming down the pipe for her.”
By Allen Sykora of Kitco News; asykora@kitco.com
