(Kitco News) - Gold has been stuck on either side of $1,500 an ounce for eight weeks and Wall Street analysts are not expecting the trend to change anytime soon even as Main Street remains bullish on the yellow metal, according to the latest results of the Kitco News Weekly Gold Survey.
The gold market showed its resilience Friday, after prices have held above $1,500 an ounce following a “solid” U.S. employment report. According to the Bureau of Labor Statistics, 128,000 jobs were created in October, significantly beating consensus forecasts for gains of around 90,000.
Some analysts have noted that gold is holding up fairly well because it will take a lot of good news to shift Federal Reserve away from its neutral stance and slight easing bias.
“I think you have to be completely neutral gold right now,” said Ole Hansen, head of commodity strategy at Saxo Bank. “I’m still long-term bullish but I am going to sit on my hands until the chart tells me something different.”
This week, 14 market professionals took part in the Wall Street survey. Seven analysts or 50% said they see prices trading sideways next week. Four analysts, or 29%, predicted that gold will rise. The remaining three voters, or 21%, expect prices will fall next week.
Meanwhile, 552 respondents took part in an online Main Street poll. A total of 403 voters, or 72%, called for gold to rise. Another 87, or 16%, predicted gold will fall. The remaining 62voters, or 11%, saw a sideways market.
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72%16%Carsten Fritsch, precious metals analyst at Commerzbank, said that although the gold market is lacking a catalyst to push prices higher, investors shouldn’t ignore the fact that lower-for-longer interest rates make gold an attractive alternative asset because of lower opportunity costs.
He added that in the current environment, gold prices should continue to hold the $1,500 an ounce level.
However, there are some analyst who see further potential in gold because of how it has held critical support in the face positive economic data. David Madden, senior market analyst at CMC Markets, said that he is probably 60% bullish on gold in the near-term.
He added that he was expecting gold prices to fall below $1,500 in reaction to October’s non-farm payrolls report.
“Rates aren’t going higher anytime soon and if a good jobs report can push gold prices lower than the bias in gold is to the upside,” he said. “We are only a couple of bad economic reports away from renewed recession talks. Bad news is more likely to push gold prices higher than good news is likely to push gold lower.”
Adam Button, managing director at Forexlive.com, said that he is also bullish on gold as he sees the Fed’s latest policy stance impacting the U.S. dollar.
“This week, the Federal Reserve basically said it can get a whole lot better and they still wouldn’t raise interest rates,” he said. “I think there is a weak dollar trade out there in the market and that will support gold.”
Looking past U.S. monetary policy, Richard Baker, editor of the Eureka Miners Report, said that he is bearish on gold in the near-term as equity markets continue to trade near record highs.
“The key chart to watch for gold is the gold-to-S&P ratio. The S&P 500 at 3,100 implies a gold price of $1,457,” he said. “Baring a calamitous event, a rising domestic stock market equates to lower gold prices in the near term with a possible bearish trend reversal in the wings.”
