(Kitco News) - The bears have a slight upper hand on both Wall Street and Main Street in the weekly Kitco News gold survey.
Wall Street
35%
41%VS
Main Street
35%46%Seventeen traders and analysts took part in a Wall Street survey. Six voters, or 35%, see gold prices rising by next Friday. Seven, or 41%, expect prices to fall, while four, 24%, look for a sideways market.
Meanwhile, 402 participants took part in the Main Street survey. A total of 139, or 35%, called for gold to rise, while 186, or 46%, saw lower prices. The remaining 77, or 19%, were neutral.
In the last survey, 56% of Main Street respondents looked for gold to fall this week, while the largest bloc – at 44% -- of Wall Street participants forecasted a bounce in prices. Just before 11 a.m. EST, Comex February gold was down $3.50 for the week to $1,133.90 an ounce making Main Street right, so far.
Still, going back to mid-May, Wall Street and Main Street alike have been right more often than not. During that time, Wall Street forecast correctly 21 times and was wrong 10 times, a winning percentage of 68%. Main Street had an 18-13 mark during this period for 58%.
“We might see some short covering going into the end of the year,” said Charlie Nedoss, senior market strategist with LaSalle Futures Group.
Ken Morrison, editor of the newsletter Morrison on the Markets, anticipates a “modest $15-$20 rally” in the final week of 2016.
“Beyond next week, the similarities of the current market to year-end 2015 are striking,” Morrison said. “In both cases, gold is making its low for the year and open interest at 400,000 futures is nearly identical to year-end 2015. Bullish sentiment at 9% now compares to 8% on gold's final day in 2015. As we enter 2017, there are high expectations and optimism policy changes will drive economic expansion, but there is also an underlying current of uncertainty regarding the new U.S. administration. Gold may need a few more weeks of basing within a narrow trading range, but I won't be surprised if 2017 price trends repeat 2016.”
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, sees an eventual rally, but not quite yet.
Next week is likely to be “flat to down in a continuation of recent trend,” Day said. “But we remain quite bullish a little further out as it becomes obvious that the Federal Reserve’s words remain stronger than its bite and as the euro crisis -- with Brexit negotiations, French elections, a new Italian government, and the immigration crisis -- all come to the fore. This is all positive for gold, which is oversold on negative sentiment.”
Adam Button, of Forexlive.com, sees gold lower next week, anticipating “some minor selling into year-end before the January effect takes over and pushes gold higher next month.” Jim Wyckoff, senior technical analyst with Kitco, said the technical charts “remain firmly bearish” for now.
Richard Baker, editor of the Eureka Miner Report, said that he is optimistic that gold “will regain its mojo in the coming year, falling in a range of $1,125 to $1,320 per ounce.” However, for the rest of December, he said “there may be more pain ahead” although gold at the $1,115-per-ounce level would be a “tempting buy."
Meanwhile, Colin Cieszynski, chief market analyst in Canada for CMC Markets, looks for gold to be neutral in a quiet market during a holiday-abbreviated week. “Action in defensive plays is more likely to gravitate toward the Japanese yen, with Japanese economic figures dominating the news calendar,” he said.
Kevin Grady, president of Phoenix Futures and Options LLC, is also neutral on gold for next week, commenting that there have not been a lot of fresh shorts entering the market lately, with much of the pressure coming from bullish participants liquidating positions. “I don’t see anyone putting on large bets going into the New Year,” he said.
By Allen Sykora of Kitco News; asykora@kitco.com
