(Kitco News) - Gold lost some of its shine this week, and voters in Kitco News’ weekly gold survey look for it to lose even more luster next week.
Wall Street
16%
58%VS
Main Street
44%45%Wall Street participants tended to base their expectation on ideas the U.S. dollar will add to its recent momentum.
Nineteen market professionals took part in the Wall Street survey. Eleven participants, or 58%, look for gold to be lower next week. Only three, or 16%, called for higher, while the remaining five, or 26%, were either neutral or expect a sideways market.
The bears had the upper hand in the Main Street poll, although barely by a mere six votes. Of the 858 votes cast, 386 of them, or 45%, look for gold to fall in the next week. Another 380, or 44%, said higher, while 92, or 11%, were neutral.
For the trading week now winding down, 65% of Wall Street voters and 61% of Main Street respondents were bullish. Around 11:06 a.m. EDT, Comex December gold was down by 1.6% for the week so far to $1,283.90 an ounce.
So far in 2017, but not counting the current week, Wall Street forecasters collectively were right 23 of 40 times for a winning percentage of 58%. Main Street was right 25 of 39 times for 64%. Wall Street was ahead for nearly all of 2017 before a five-week losing streak.
“There's been a lot of distribution in volume since gold broke its intermediate uptrend in mid-September without a clear trend development,” said Ken Morrison, editor of the newsletter Morrison on the Markets. “With the passage of the U.S. budget resolution (by the Senate), the dollar appears to be headed for a period of strength, so absent a geopolitical flare-up or setback in financial markets, gold's path of least resistance is to the downside. I expect another test of $1,270 support in the week ahead.”
Kevin Grady, president of Phoenix Futures and Options LLC, noted there are still a large number of bulls with long positions in the futures market. This means there is potential for selling in the form of long liquidation if those traders exit.
“If you look at everything coming out – economic data and what was passed yesterday by [the Senate] – it’s very strong for the dollar,” Grady said. “If [Jerome] Powell is appointed [next Fed chair], he’s hawkish and that would also put some pressure on gold because I think you’re going to see the dollar rally off of that news.”
Bob Haberkorn, senior commodities brokers with RJO Futures, figures the approach of the Federal Reserve meeting in December – when policymakers are expected to hike interest rates again – will start to exert some pressure on gold.
“The geopolitical risk is out there and that is what’s keeping it afloat, along with some of the data we’ve seen on inflation,” Haberkorn said. “But the fact that the meeting is hanging over the market’s head, gold is going to remain under pressure.”
Peter Hug, global trading director of Kitco Metals, also leans lower.
“I think the budget agreement has more clout than a ‘possible’ dovish Fed chair, in the short term,” he says. “So I think we may see lower prices next week.”
Adam Button, currency analyst with Forexlive.com, is among those who see gold higher.
“The U.S. dollar is vulnerable to hawkish signals from foreign central banks,” he said. “North Korea is due for a flare-up and jitters in China could spread.”
Bill Baruch, president of Blue Line Futures, said he remains long-term bullish on gold, but added that the reversal this week has neutralized his near-term outlook.
“I will be more upbeat if we can achieve a close back above $1,293,” he said. “There is tremendous value at $1,263-$1,269 and this would present a strong buy opportunity as I do not see the dollar staying higher for longer.”
Ralph Preston, principal with Heritage West Financial, sees gold not moving much for now, although he will be watching for a breakout in prices.
“Prices are in a tight range between $1,307 and $1,265. A close below or above those numbers in the coming week should hint at a trend in either direction,” he said.
Here is a sampling of thoughts from Kitco Main Street voters on Kitco’s commenting Kitco Chat:
