(Kitco News) - Participants in the weekly Kitco News gold survey look for gold to keep rising next week, with traders and analysts citing the softer tone in the U.S. dollar.
Wall Street
52%
38%VS
Main Street
62%27%The greenback fell sharply this week after U.S. Treasury Secretary Steven Mnuchin said a softer U.S. dollar was good for the economy, although he later said his comments were taken out of context and President Donald Trump suggested he favors a stronger dollar.
Twenty-one market professionals took part in the Wall Street survey. Eleven, or 52%, called for gold to rise. There were eight votes, or 38%, saying gold would fall, while two participants, or 10%, called for a sideways market.
Meanwhile, 708 votes were cast in an online Main Street poll. A total of 436 voters, or 62%, looked for gold to climb in the next week. Another 190, or 27%, said lower, while 82, or 12%, were neutral.
For the trading week now winding down, 71% of Wall Street voters and 61% of Main Street voters were bullish. As of 11:10 a.m. EST, Comex February gold was up by 1.3% for the week so far to $1,350.70 an ounce.
Not counting the current week, Wall Street and Main Street are both 1-1 so far in 2018. For the year 2017, Main Street was right 31 of 50 times for a winning percentage of 62%.Wall Street forecasters collectively were right 30 of 51 times for 59%. (There were two weeks without a Main Street poll and one week without a Wall Street poll).
Afshin Nabavi, head of trading at trading house MKS (Switzerland), sees gold moving into a higher range, listing the area around $1,375 on the upside and $1,345 to $1,340 on the downside.
“The dollar – despite the rhetoric – seems to be under pressure,” Nabavi said. “The numbers [Friday U.S. economic data] were not excellent. The metals should be bought on dips.”
Phil Flynn, senior market analyst with at Price Futures Group, looks for gold to bounce from Friday’s weakness as the dollar remains soft. He suggested the market will view comments from the U.S. administration as still favoring a softer dollar in the short term, despite subsequent strong-dollar statements.
Jim Wyckoff, senior technical-chart analyst with Kitco, said the charts remain firmly bullish.
“The U.S. dollar is struggling and that will continue to boost gold in the month and week ahead,” said Adam Button, currency analyst at Forexlive.com.
Meanwhile, Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, is among those looking for a pullback.
“Gold needs to consolidate a little after the strong move since early December,” Day said. “With the government shutdown out of the way for now, one support for gold is removed. Similarly for the Korean détente during the Olympics. Fundamentally, we remain bullish, however.”
Ken Morrison, editor of the newsletter Morrison on the Markets, also anticipates a correction.
“This has already been a historic week for gold. Bullish sentiment exceeded 90%, the highest in six years, and volume on the week may exceed the November 2016 record,” Morrison said. “Gold has achieved a price target this week, matching the September 2017 top, filling a price gap in the process. The September time-frame is also important because sentiment for the dollar was extremely bearish as it is now. Given the run gold's had and the extreme condition of sentiment, gold and the dollar, a corrective pullback to $1,330 seems the most likely near-term path next week.”
Kevin Grady, president of Phoenix Futures and Options LLC, also sees a retreat after gold ran up on dollar weakness. “I think it’s getting to be a crowded trade,” he added.
