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Wall St., Main St. See Continuation Of Gold Rally

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(Kitco News) - Wall Street and Main Street look for gold to rise again next week, with potential U.S. dollar weakness the most frequently cited factor among traders and analysts.

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Main Street

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Twenty-three market professionals took part in a weekly Wall Street survey. Fifteen voters, or 65%, see gold prices rising by next Friday. Three, or 13%, said lower, while five voters, or 22%, look for a sideways market.

Meanwhile, 1,286 Kitco readers submitted votes in an online Main Street poll. Nine hundred voters, or 70%, are bullish. Another 237, or 18%, say that gold will fall, while 149, or 12%, are neutral.

In last Friday’s survey for the current week, 61% of Wall Street voters and 69% of Main Street voters predicted gold would rise. As of 11:03 a.m. EDT, Comex April gold was 1.4% higher for the week at $1,247.30 an ounce.

So far in 2017 but not counting the current week, Wall Street called gold’s direction correctly eight of 11 times for a winning percentage of 73%, while Main Street was 6-5 for 55%.

Several observers cited dollar weakness as a factor likely to help gold again.

“The U.S. dollar is beginning to struggle,” said Adam Button, currency analyst with Forexlive.com.

“The dollar is looking weak right now,” echoed Charlie Nedoss, senior market strategist with LaSalle Futures Group. “A lot of the Fed stuff (expected monetary tightening) has been priced into the dollar.”

“The dollar and stock market are not doing that great (lately),” said Afshin Nabavi, head of trading at trading house MKS (Switzerland) SA. Gold prices pulled back when they could not break above $1,250 an ounce convincingly, he pointed out. “But it couldn’t break on the downside either…. We are seeing higher lows. That, generally speaking, tends to translate into prices going higher.”

Jim Wyckoff, senior technical analyst with Kitco, also said higher. “Bulls still have technical momentum,” he added.

Sean Lusk, director of commercial hedging Walsh Trading, looks for gold gains amid some of the uncertainty facing markets, including congressional consideration of a U.S. health-care law. A key for the metal, he added, will be whether stocks resume their ascent. He looks for the Federal Reserve to hold off on further rate hikes until inflation picks up more.

“I don’t see too many reasons to be short (bearish) right now,” Lusk said. “Funds are still net long, but their length is not close to what it has been the last six months….The path of least resistance remains higher.”

Jordan Roy-Byrne, newsletter writer with The Daily Gold, is among those who looks for gold to move lower next week.

“The gold stocks usually lead the metal, and the stocks have twice failed at their 50-day moving average,” he said. “Absent some volatility from the health-care vote, the short-term trend could be shifting to lower.” 

Kevin Grady, president of Phoenix Futures and Options LLC, also looks for gold to fall back as some traders exit ahead of first-notice day for the April gold futures next week.

“We noticed probably about 15,000 lots of new longs coming in the last two days here,” Grady explained. “We need to break the $1,257 level, which is big for gold. We haven’t been able to get above it. I think some of these longs – they’re all in the April contract – are going to liquidate some of these positions rather than roll them, especially if we can’t get above $1,257.”

Meanwhile, here is a sampling of thoughts from some Kitco Main Street voters on Kitco’s new commenting feature – Kitco Chat – that began last week:

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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