EDITOR'S NOTE: Catch the all new Kitco.com Market Data and Bitcoin sections!

Gold May Hold In Sideways Trading Pattern Next Week

Friday May 16, 2014 12:00 PM

(Kitco News) - There was no majority opinion toward the direction of gold prices for next week in the Kitco News Gold Survey, but a nominal number of participants said they expect gold to hold in the current trading range between roughly $1,280 and $1,315 an ounce.

Out of 33 participants, 25 responded this week. Of those, 11 see prices trading sideways or are neutral, while eight see prices down and six see prices higher. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts.

Last week, survey participants looked for prices to fall this week. As of 11:30 a.m. EDT, Comex gold for June delivery was up $6 for the week.

Since about late March, gold prices have largely held in that trading range, and with little economic news slated for next week, and tensions between Ukraine and Russia not dominating headlines at the moment, several survey participants said they see no reason for the market to move out of the current range.

Charles Nedoss, senior market strategist at LaSalle Futures Group, said the market is stuck between the 100-day moving average, which comes in for the Comex June contract at $1,290, and 200-day moving averages, which comes in at $1,300.90.

“Right now this is a pocket-picking trade. People say there are up trends and down trends, but there are also sideways trends and that’s where we are. Eventually we’ll break out of it, but it’s impossible to figure out how, so you have to reduce exposure. The only thing supporting this is the Ukraine, but it’s not going higher on the Ukraine,” he said.

Frank Lesh, broker and futures analyst with FuturePath Trading, said gold “is forming a wedge or triangle and as the trading range contracts and the longer it goes sideways the greater the breakout or breakdown should be…  Who knows what the catalyst will be as there is enough conflicting news to confuse us all, or at least me. I see an upside breakout to around $1,360 and downside around $1,220. I am neutral until this market makes a decisive move.”

Those who see higher prices said gold may benefit from the recent tumble in U.S. Treasury yields. Earlier this week, the yield on the 10-year U.S. Treasury note fell to 2.5%, despite an uptick in certain inflation gauges.

The “bond market (is) suggesting something (is) askew, and suggesting flight to safety,” said Jim Wyckoff, Kitco’s technical analyst.

Those who see lower prices said gold’s recent trading action may portend at least a move down to test the current trading range support levels.

“The succession of lower-highs since mid-April and inability of gold to push through the $1,310 resistance on several attempts leaves me in the bearish camp. Additionally, yen strength may lead to pressure in gold and commodities in general on an unwind of the yen-carry trade. Gold may not break the $1,275 support over the next week but I expect a re-test soon,” said Ken Morrison, editor of online newsletter Morrison on the Markets.

Kitco Gold Survey

Related Stories:

By Debbie Carlson of Kitco News; dcarlson@kitco.com
Follow me on Twitter at @dcarlsonkitco



kitco news

Precious Metal Charts

Click to see this Precious Metal chart
  1. 24h
  2. 30D
  3. 60D
  4. 6M
  5. 1Y

Interactive Chart