(Kitco News) - Gold hit its highest levels in more than a year on Friday, and Wall Street and Main Street look for the momentum to continue next week, based on the weekly Kitco News gold survey.
The metal has been underpinned by continuing trade tensions between the U.S. and its partners, resulting in worries about an economic slowdown that in turn has market participants looking for a rate cut from the U.S. Federal Open Market Committee before the end of the summer. Attacks on a pair of tankers in the Middle East prompted additional buying. And whenever markets break higher, they generate technical-chart momentum.
Twenty-two market professionals took part in the Wall Street survey. A total of 16 voters, or 73%, called for gold to rise. There were three votes each, or 14%, for either lower or sideways/neutral.
Meanwhile, 558 respondents took part in an online Main Street poll. A total of 389 voters, or 70%, called for gold to rise. Another 122, or 22%, predicted gold would fall. The remaining 47 voters, or 8%, saw a sideways market.
Wall Street
73%
14%VS
Main Street
70%22%In the last survey, Main Street and Wall Street were both bullish. As of 11 a.m. EDT, they were right, with Comex August gold futures were trading up 0.4% for the week so far at $1,351.40 an ounce. The contract traded as high as $1,362.20 an ounce, its highest level since April 2018.
“With the tensions escalading between Iran and the U.S. as well as all the tariffs on and off, I think gold has a good potential to see new highs,” said Afshin Nabavi, head of trading at MKS. “Next week, [the] FOMC will have a meeting on Wednesday…and the market thinks they may want to cut interest rates.”
Richard Baker, editor of the Eureka Miner’s Report, commented that not only has gold benefited from its role as a safe haven, but real interest rates remain suppressed given high demand for U.S. Treasury notes, which he noted is a bullish development for non-interest-bearing assets like gold.
“As oil prices have fallen on weakening demand, gold has proved resilient and, more recently, on the move higher,” Baker said. “A gold price model based on Brent [crude], 10-year real rates, [the] euro and Japanese yen demonstrates high fidelity since early March. That model suggests that Comex gold should return to this morning's highs closing above $1,360 per ounce next week. Silver should follow above the $15-per-ounce level.”
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, also said higher. “Importantly, sentiment seems to be changing, and so bullish factors are starting to be reflected in the price,” Day said.
Jim Wyckoff, senior technical analyst with Kitco News, said he looks for gold to keep rising since the charts turned more bullish.
“Gold is in a solid bull market,” said Phil Flynn, senior market analyst with at Price Futures Group. “Increased geopolitical risks as well as concerns about the global economy will give gold a bid. More talk of a slower global economy will have investors looking at gold as a hedge.”
Mark Leibovit, publisher of VR Metals/Resource Letter, said the seasonal low is “behind us” and “an attack at $1,370 in the gold is in the near-term horizon.”
Meanwhile, Ole Hansen head of commodity strategy at Saxo Bank, said he is short-term bearish on gold, citing the risk that the Federal Reserve does not prepare markets for a July rate cut. However, he added that he would look to buy dips as weak economic data point to a slower U.S. economy and will prompt the Fed to eventually cut rates.
David Madden, market analyst at CMC markets, also described himself as bearish, not expecting the Fed to set the stage for a July rate cut.
“Some traders are getting ahead of themselves in many different markets, not just gold,” he said. “If the Fed doesn’t tee up a rate cut for July, then that would cause sentiment to dramatically shift.”
Two participants said they are neutral-sideways camp.
“I am neutral on gold for next week because I think it could potentially stage big moves in both directions in the coming days,” said Colin Cieszynski, chief market strategist at SIA Wealth Management. “While gold is breaking out today, if the Fed is not as dovish next week as some on the Street seem to be hoping, the U.S. dollar could bounce back.”
Neil Mellor, currency strategist at Bank of New York Mellen, also said he is neutral on gold and the U.S. dollar, as he expects the Federal Reserve strikes a neutral note and rate-cut expectations get pushed to later in the year.
