(Kitco News) - Wall Street voters remained short-term bearish on gold in Kitco News’ weekly survey, while Main Street leans ever so slightly bullish.
Wall Street
25%
69%VS
Main Street
44%42%The precious metal was pressured this week by U.S. dollar strength and ideas that U.S. President Donald Trump may appoint a more hawkish chief of the Federal Reserve, with Stanford economist John Taylor seen as one of the front-runners.
Sixteen market professionals took part in the Wall Street survey. Eleven participants, or 69%, predicted that gold will be lower next week. Four, or 25%, called for higher, while just one voter, or 6%, said sideways.
Meanwhile, 599 votes were cast in an online Main Street poll. A total of 264 voters, or 44%, looked for gold to rise in the next week. Another 250, or 42%, said lower, while 85, or 14%, were neutral.
For the trading week now winding down, the largest bloc of voters in each camp – 58% for Wall Street voters and 45% for Main Street – was bearish. Around 11 a.m. EDT, Comex December gold was down by 0.7% for the week so far to $1,271.20 an ounce.
So far in 2017, but not counting the current week, Wall Street forecasters collectively were right 23 of 41 times for a winning percentage of 56%. Main Street was right 25 of 40 times for 63%. Wall Street was ahead for nearly all of 2017 before suddenly hitting a six-week losing streak.
“Everything to me says a little lower for gold,” said Kevin Grady, president of Phoenix Futures and Options LLC, citing “stellar” corporate earnings so far, the 3% rise in third-quarter U.S. gross domestic product and U.S. dollar strength.
“There are still a lot of longs in this market here,” he said, and that means potential for selling if these bullish traders exit, which likely would be encouraged should the market break down below its 200-day moving average that stands around $1,267. The metal has been temporarily below this.
Charlie Nedoss, senior market strategist with LaSalle Futures Group, looks for a stronger U.S. dollar to pressure gold in the near term, with the metal perhaps testing the $1,250 area.
“The GDP numbers are pretty strong,” he said. “Consumer spending looked pretty good.”
Phil Flynn, senior market analyst with at Price Futures Group, also looks for greenback gains to pressure gold, particularly amid expectations Trump will nominate a new Fed leader more hawkish than current Chair Janet Yellen. “Because of that, we have some upward momentum in the dollar,” he said.
Bob Haberkorn, senior commodities broker with RJO Futures, said gold needs a fresh news story to start pushing the metal higher again. In the absence of this, he anticipates further weakness, particularly if chart support fails.
“Otherwise, the Fed narrative is out there,” Haberkorn said. “The reality is the Fed raising rates and better earnings are out there.”
Jasper Lawler, head of research at London Capital Group, said the gold market looks ominous after it was unable to hold above $1,300. He also sees further U.S. dollar strength weighing on gold into year-end. However, one saving grace for gold could be the Fed chair announcement. Gold could get a pop if Taylor isn’t Trump’s nomination, he said.
Meanwhile, Jim Wyckoff, senior technical analyst with Kitco, said the market is due for a “corrective bounce.”
Sean Lusk, director of commercial hedging Walsh Trading, figures gold could dip some more, but then find chart support and bounce. He also looks for short covering, in which bears buy to offset their positions, particularly headed into the U.S. jobs report next Friday.
Bill Baruch, president of Blue Line Futures, is bullish on gold, commenting that $1,260 represents major support and that he expects any drop below this will be bought. “A lot of negative has been priced into the market, and all the sellers in gold have already sold,” he said.
