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Wall St. Bearish, Main St. Bullish On Prices

Kitco News

(Kitco News) - Wall Street turned bearish on the short-term direction of gold prices while Main Street remained slightly bullish, based on the Kitco News weekly survey.

Comex August gold traded on both sides of $1,300 an ounce this week, ultimately softening on Friday in the wake of a stronger-than-forecast U.S. employment report. Nonfarm payrolls climbed 223,000 in May, the Labor Department said.

Fourteen market professionals took part in the survey. There were 10 votes, or 71%, calling for gold prices to fall. There were two votes each, or 14%, for gold to rise or else trade sideways.

Meanwhile, 578 voters responded in an online Main Street survey. A total of 296 respondents, or 51%, predicted that gold prices would be higher in a week. Another 182 voters, or 31%, said gold will fall, while 100, or 17%, 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, 61% of Wall Street voters and 54% of Main Street voters predicted gold would rise. As of 11:02 a.m. EDT, Comex August gold was down 0.8% for the week so far to $1,299.10 an ounce.

“Gold is going to remain under pressure next week with the jobs number better than expected and the likelihood of a Fed rate hike coming,” said Bob Haberkorn, senior commodities broker with RJO Futures.

Sean Lusk, director of commercial hedging of Walsh Trading, looks for gold to be steady to lower on a continued reaction to the strong U.S. jobs report.

“I’m not looking for a huge sell-off, but I am looking for a pullback,” Lusk said. “The path of least resistance appears to be lower.”

Charlie Nedoss, senior market strategist with LaSalle Futures Group, looks for more of a retreat in gold prices. “Technically, they [gold futures] failed this week, he said, citing the market’s inability to get back above the 20-day moving average despite several attempts.

“I remain bearish for gold,” said Kevin Grady, president of Phoenix Futures and Options LLC. “We have been seeing ‘risk off’ the past few days. Yields have been increasing, which should keep a damper on the flat gold price. In addition, the strong nonfarm payroll numbers coupled with the 3.8% unemployment rate will steady the Fed on their path of rate hikes this year. I believe that will ultimately keep a ceiling on gold prices.”

However, Grady added, there is still potential for a “tremendous amount of geopolitical news” that could mean volatility in prices.

“Violent price spikes can occur at any moment,” Grady said. “We are anticipating active markets the next few months.”

Phil Flynn, senior market analyst with at Price Futures Group, looks for gold to rise despite the strong jobs number.

“We’ve been pretty range-bound on gold,” he said. “Obviously the strong, blockbuster jobs report put pressure on gold because it increases expectations the Fed will raise rates. But there are still geopolitical concerns around the world.”

Further, Flynn added, the ongoing issue of steel and aluminum tariffs is likely to rekindle trade-war concerns and also underpin gold.

Richard Baker, editor of the Eureka Miner Report, was the other bull in this week’s survey. “I believe it likely that gold will again reclaim $1,300 territory as political/geopolitical concerns create more lift than the combined drag of a strong dollar and a re-energized Fed that may raise rates more aggressively on upside jobs numbers,” Baker said.

Mark Leibovit, editor of the VR Gold Letter, said he is neutral for now, “waiting for confirmation of the summer low buy point."

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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