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(Kitco News) - While Wall Street is convinced that gold is ready to break through $1,300 in the near-term, retail investors need to be persuaded a little bit more to join the bullish side, according to the latest weekly Kitco News gold survey.
Wall Street
53%
12%VS
Main Street
47%31%With gold holding near its highest level following weaker-than-expected inflation data, a majority of market analysts expect that it is only a matter of time before prices push above $1,300 an ounce.
This week, 17 traders and analysts took part in a Wall Street survey. Nine voters, or 53%, see gold prices rising by next Friday. Two, or 12%, see lower prices, while six voters, or 35%, are either neutral or expect sideways trading.
Meanwhile, 2,153 Kitco readers submitted votes in online Main Street polls. A total of 1,018 voters, or 47%, are bullish. Another 661, or 31%, say that gold will fall, while 474, or 22%, are neutral.
In last Friday's survey for the current week, 48% of Wall Street and Main Street voters called for gold to rise this week. As of 11:27 a.m. EDT, Comex December gold was up more than 2% on the week to $1,293.20 an ounce. Gold is heading to its biggest weekly gain since mid-April.
One interesting result of the latest survey is the strong neutral sentiment in the marketplace, both among analysts and retail investors. Historically, neutral votes are in the low double digits.
With gold hovering just below a key psychological level, some analysts warn that the market needs a new driver to give it the momentum it needs to cross the $1,300 threshold.
“We have seen this level hold twice before and I think we need another driver,” said Ole Hansen, head of commodity strategy at Saxo Bank. “I think that has to come from a selloff in the stock market.”
Not only is weak economic data keeping gold supported, but the market has made significant gains on rising tensions between the U.S. and North Korea. However, analysts said that the lack of new geopolitical headlines could prompt investors to take some profits off the table in the near-term.
“I expect the week ahead to be a consolidation/pullback week for gold predicated on the notion the rhetoric-exchange between the U.S. and [North] Korea has reached culmination and the next step will be more conciliatory in attempt at diplomacy and negotiation,” said Ken Morrison, editor of the newsletter Morrison On The Markets.
Colin Cieszynski, senior market analyst at CMC Markets, said that he is neutral on gold because the market is entering overbought territory in the near-term.
“Technically, gold is approaching the top of its trading range…so it’s looking due for a rest,” he said. “I don’t see reason for a major correction either as political risks are likely to remain high.”
On the bullish side, analysts said that gold has strong technical momentum as the U.S. dollar remains week and interest rate expectations remain low.
Darrin Newsom, senior analyst at DTN, said that a triple top is traditionally a very bullish sign for gold and is usually taken out. He added that a break above $1,298 could create an upside target of $1,386 an ounce.
While neutral sentiment in the marketplace might be larger than usual, there is also a clear absence of bearish sentiment.
“There is some reluctance to push prices higher but I don’t think you want to go home short this weekend with everything that is happening,” said Sean Lusk director of commercial hedging with Walsh Trading.
Here is a sampling of thoughts from Kitco Main Street voters on Kitco’s commenting Kitco Chat:
