(Kitco News) - After failing at $1,800 an ounce this week, Wall Street analysts are undecided on where gold is headed next, while Main Street remains bullish, according to Kitco's weekly gold price survey.
After rallying $40 mid-week on hotter-than-expected inflation data, gold was unable to breach its psychologically important $1,800 an ounce level on a sustainable basis, which triggered another round of selloff.
At the time of writing, December Comex gold futures were trading at $1,768.00, down 1.66% on the day but slightly higher on the week.
Kitco's gold price survey results showed that out of 13 participating analysts on the Wall Street side, opinions were almost evenly split — 38.5% were bullish, another 38.5% were bearish, and the other 23% were neutral on prices next week.
The Main Street side remained more decisively optimistic. Out of the 1,425 participating retail investors, 68% were bullish on prices next week, 19% were bearish, and 13% were neutral. This week also marked the highest survey participation rate since mid-June.
Wall Street
38.5%
38.5%VS
Main Street
68%19%Weighing on gold at the end of the week were stronger-than-expected retail sales numbers, which signaled that the Federal Reserve could be more aggressive when it comes to tapering or rising rates.
"We are going to continue to have these ups and downs until the market realizes that any tightening the Federal Reserve and other major central banks instigate will be too little too late. When that will be, is difficult to say, but when it happens, gold will move sharply up, and the longer it takes, the more explosive the move," said Adrian Day Asset Management president Adrian Day.
Right now, the market is projecting a possible rate hike in the second half of next year, which is sooner than previously thought, noted Bannockburn Global Forex managing director Marc Chandler.
"I am still bearish gold. The big rally surprised me, but it was turned back from the 200-day moving average and the $1,800 area. The selloff ahead of the weekend as U.S. rates jumped negates the bullish impulse of rally. Even as U.S. long-end yields backed off, the market was aggressive in pricing in Fed hikes, a small risk is priced in for a July hike seen in the August Fed funds futures. A break of the $1,760 area signals a test on recent lows $1,745-$1,750."
The price range investors should be watching next week is between $1,725 and $1,825 an ounce.
The analysts who are bullish still see gold breaching the $1,800 an ounce, citing inflation fears, weaker U.S. dollar, and more safe-haven demand in the market.
"Tracking gold continues to be like watching paint dry. Despite the selloff seen late this week, the December contract still looks to be in a short-term uptrend on its daily chart. This coincides with a short-term downtrend developing in the U.S. dollar index. Given this, next week could see gold try to rally again," Darin Newsom Analysis president Darin Newsom told Kitco News.
The bearish voice among analysts reminded investors that the U.S. Treasury yields are still going up, and gold will have a hard time rallying until this trend reverses.
"Despite an impressive week for gold, the trend is still higher in yields, and the seasonals are a headwind. That will change closer to year-end, but for now, the trade is to wait for a dip to buy," said ForexLive managing director Adam Button.
