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No Clear Consensus On Gold Price Direction

Kitco News

(Kitco News) - Wall Street and Main Street are mixed on whether gold prices will rebound in the near term after this week’s sharp sell-off, based on the Kitco News weekly gold survey.

Gold was pummeled this week by a rising dollar that in turn was lifted in part by higher Treasury yields. The traders and analysts who look for a gold bounce commented that the selling has become overdone, thus they see some kind of bounce-back. Those looking for further declines cite expectations that the trend in the dollar and gold will continue, as well as technical-chart weakness that has ensued in the precious metal.

Sixteen market professionals took part in the survey. There were seven votes each, or 44%, calling for gold prices to rise and fall over the next week. Two voters, or 13%, see prices unchanged or sideways.

Meanwhile, a smaller-than-normal 605 voters responded in an online Main Street survey. A total of 296 respondents, or 49%, predicted that gold prices would be lower in a week. Another 241 voters, or 40%, said gold will rise, while 68, or 11%, see a sideways market.

Kitco Gold Survey

Wall Street

Bullish
Bearish
Neutral

VS

Main Street

Bullish
Bearish
Neutral

For the trading week now winding down, 79% of Wall Street voters and 89% of Main Street respondents called for gold to rise. As of 11 a.m. EDT, Comex June gold was down 2.2% for the week so far to $1,291.20 an ounce.

“Rising Treasury yields and the strong dollar have been the headwinds for gold this week and gold's next move is largely dependent on them,” said Ken Morrison, editor of the newsletter Morrison on the Markets. “I'm betting extreme sentiment in all of them results in a modest rally for gold over the next week. Bearish sentiments on bonds, notes and gold are the most extreme in several months; specific to gold, the most bearish since July 2017. I expect gold manages to hold above $1,280 and recovers to $1,305 over the next week.”

Phil Flynn, senior market analyst with at Price Futures Group, also looks for gold to bounce back after it was battered this week by a stronger U.S. dollar and rising Treasury yields. He pointed out that physical demand is picking up after the price break lower.

“We think the market is oversold,” Flynn said. “We think it’s now near the low end of the trading range. So we think it will mount a rally next week.”

Richard Baker, editor of the Eureka Miner Report, sees gold reclaiming $1,300.

“Although there has been a terrific acceleration in interest rates and U.S. dollar value lately, that will slow,” Baker said. “Inflation should start to close the gap with interest rates, and rising deficits will eventually erode dollar -- both bullish indications for gold. There is also enough lingering political/geopolitical uncertainty to keep gold afloat above its trend line.”

Meanwhile, several analysts said they see the recent strength in the U.S. dollar as a factor likely to continue driving down gold prices.

Ralph Preston, principal with Heritage West Financial, is among those who look for follow-through momentum lower. Now that prices have broken below $1,300 an ounce, “$1,275 looks like a target on the downside,” he said.

Charlie Nedoss, senior market strategist with LaSalle Futures Group, looks for gold to keep working its way lower until the August futures fill a gap left on a price chart. A gap on the chart was left between the Dec. 21 high of $1,284.30 and the Dec. 22 low of $1,291.30.

Jim Wyckoff, senior technical analyst with Kitco, sees prices steady to lower since the “price trend is down.”

George Gero, managing director with RBC Wealth Management, said “large open interest in gold options favor bears.” He added, however, that he anticipates choppy trade.

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 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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