(Kitco News) - Wall Street and Main Street continue to have opposing viewpoints on the short-term price direction of gold, although the difference has narrowed, based on the weekly Kitco News gold survey.
Wall Street
50%
30%VS
Main Street
56%30%For the second Friday in a row, the largest Wall Street bloc of voters called for gold to fall over the next week, although the 50% who said lower is down from the 65% bearish vote a week ago. Main Street said higher, although the 56% bullish vote is down from 64% a week ago. Previously, both camps had been bullish for six weeks in a row.
Twenty market professionals took part in the Wall Street survey, with ten calling for gold to fall. Six voters, or 30%, said higher, while four, or 20%, called for the market to be sideways.
Meanwhile, 731 votes were cast in an online Main Street poll, with 408 voters bullish. Another 219, or 30%, said lower, while 104, or 14%, were neutral.
For the trading week now winding down, 65% of Wall Street voters were bearish while 64% of Main Street voters were bullish. As of 11:05 a.m. EST, Comex April gold was down 1.6% for the week so far to $1,316.40 an ounce.
Not counting the current week, Wall Street and Main Street are both 2-2 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).
“I am bearish on gold for next week and think it could fall to test $1,300,” said Colin Cieszynski, chief market strategist at The Fundamental Technician. “Gold has completed a rounded top pattern while the U.S. dollar has completed a rounded bottom. Meanwhile, stocks and cryptocurrencies have stabilized and the short-lived flight into safe havens like gold has already started to subside.”
Ken Morrison, editor of the newsletter Morrison on the Markets, suggested gold could test the $1,300 area next week but hold.
“The week has generally seen money-managers paring down positions in commodities, especially gold and crude oil, as evidenced by price and open interest moving in the same direction – lower,” Morrison said. “I expect stability to return to equities next week, which probably means gold will lose some of its flight-to-safety support.”
Ralph Preston, principal with Heritage West Financial, said he is looking for “a technical test of $1,296 support on the back of a firming U.S. dollar.”
Jasper Lawler, head of research at London Capital Group, is also bearish on gold next week.
“Although it feels like gold is getting ready for a breakout, I think you can’t ignore what the charts are showing. We are down two weeks in a row so I think we probably get a bit of a dip below $1,300 before the breakout comes,” Lawler said.
Kevin Grady, president of Phoenix Futures and Options LLC, also sees further weakness, commenting that there has not been a strong correlation in which weaker stocks underpin gold. “This is not 2008-2009, when we were worried about bank failures and things like that,” he added.
Meanwhile, Bob Haberkorn, senior commodities broker with RJO Futures, looks for gold to rise although not dramatically. Support may come from uncertainty about equity markets, he said. He noted that much of the recent weakness has been due to worries about rising bond yields.
“I think next week, you’ll see traders shake that off a bit,” Haberkorn said.
George Gero, managing director with RBC Wealth Management, sees potential for shorts (bearish traders) to buy in order to cover positions “if puts are not in the money.”
Adam Button, currency analyst at Forexlive.com, also said higher.
“The countdown to [the] Lunar New Year and a cool-off from the market fears should help gold bounce back,” Button said. “And the Olympics in South Korea should be a powerful reminder that nothing is better than gold.”
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, is among those who see a largely unchanged gold market.
“If the global stock markets continue to decline, people will be looking at gold as a source of funds for margin calls, etc.,” he said. “But gold is also seen as a hedge so there will be buying, and we have seen some air out of the market in the last couple of weeks. So on balance, I would suggest little net change.”
