Kitco News Gold Survey: Respondents Turn Bearish On Prices
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(Kitco News) - The biggest voting blocs on both Wall Street and Main Street flipped from bullish to bearish in their short-term outlooks for gold prices, based on the weekly Kitco News gold survey.
The majority of the analysts and traders who took part in the survey cited two main factors behind their call for lower gold prices â€“ the strong U.S. jobs report Friday that seemingly clears the way for another Federal Reserve rate hike this month, as well as U.S. President Donald Trump announcing that he was prepared to meet North Korea’s Kim Jong Un in an effort to resolve a standoff over North Korea’s nuclear-weapons program.
A Labor Department report on Friday showed that U.S. nonfarm payrolls rose by 313,000 in February, when economists were expecting around 200,000 instead.
Seventeen market professionals took part in the weekly Kitco News Wall Street survey. There were 11 votes, or 65%, calling for gold prices to slide over the next week. Another two voters, or 12%, look for gold to rise, while four, or 24%, call for a sideways market or are neutral.
Meanwhile, 663 voters took part in an online Main Street poll. A total of 314 voters, or 47%, said bearish. Another 270 voters, or 41%, said bullish, while 79, or 12%, were neutral.
For the trading week now winding down, 67% of Wall Street voters and 50% of Main Street voters were bullish. Around of 11:02 a.m. EST, Comex April gold was nearly flat â€“ down just 30 cents -- for the week so far to $1,323.10 an ounce.
“I am bearish for gold next week,” said Kevin Grady, president of Phoenix Futures and Options. “The strong nonfarm payroll numbers ensure a March rate hike. We are also seeing positive news coming out of North Korea, which put some pressure on gold.
“We have also been seeing longs liquidating this past week. Our 100-day moving average is $1,307.20 and the 200-day moving average is $1,297. Both of these levels should provide initial support, but a settlement below the 200 DMA will attract short sellers.”
Phil Flynn, senior market analyst with at Price Futures Group, also sees weaker gold as some investors allocate away from the metal to markets such as equities in light of the jobs and North Korea news. Still, the Flynn said, “I don’t expect to see it [gold] sell off hard” due to budding inflation worries.
“With the dollar in recovery mode and gold on thin support at $1,310, I expect gold is headed lower in the week ahead,” said Ken Morrison, editor of the newsletter Morrison on the Markets. “Secondary support at $1,300 is likely to be tested but should hold.”
Colin Cieszynski, chief market strategist at SIA Wealth Management, also said he is bearish on gold for next week.
“Capital has been flowing out of defensive havens, particularly JPY [the Japanese yen] since the Trump-Kim summit was announced,” Cieszynski said. “On top of this, strong nonfarm payrolls keep the pressure on the Fed to keep raising interest rates, supporting USD.
“Technically, gold continues to drop away from resistance near $1,340, recently trading near $1,320. Potential downside support levels appear near $1,314, then the $1,300 to $1,305 zone.”
Richard Baker, editor of the Eureka Miner Report, was one of two voters who look for higher gold prices next week.
Â “Today's robust job numbers imply the economy may not only be on track but heating up,” Baker said. “This may spur the U.S. Federal Reserve to be more hawkish with interest rate hikes. The difference between interest rates and inflation expectations drive gold price; if the former leads the latter, there could be stiff headwinds for the lustrous metal. A trade war that results in slower growth and higher inflation could be potentially very bullish for gold.
“It is too early to tell which way the headlines will flow. Next week, it is likely that Comex gold will either challenge its March high ($1,342.0) or test February's low ($1,303.6). I believe the answer is up slightly from this morning's tradingâ€¦.”
Neil Mellor, senior currency strategist at Bank of New York Mellon, said that he is neutral on gold in the near term since he is neutral on the U.S. dollar.
“The U.S. dollar will be caught between potential interest-rate hikes and ongoing geopolitical tension,” Mellor said.