Kitco Gold Survey: 68% Of Main Street And Wall Street Negative On Gold
By Neils ChristensenFriday July 17, 2015 12:32
(Kitco News) - Gold hitting a new five-year low Friday morning has brought the bears out of the woodwork as both Wall Street analysts and retail investors are extremely negative on the yellow metal next week, according to the Kitco News Wall Street vs. Main Street Weekly Gold Survey.
The gold market is preparing to end its fourth consecutive week in negative territory, as prices dropped to a session low at $1,129.60 an ounce, its lowest level since April 2010.
This week, 364 people participated in Kitco News’ online survey. Of those, 247 participants, or 68%, expect to see lower gold prices next week; 90 participants, or 25%, see higher gold prices; and 27 people, or 7%, are neutral.
After weeks of indecision and mixed results, most analysts appear to be in agreement that gold prices will move lower in the short-term. Out of 33 market experts contacted, 19 responded, of which four, or 21%, said they are bullish on gold next week. At the same time, 13 professionals, or 68%, said they are bearish, and two people, or 11%, are neutral on gold. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
According to analysts, the biggest factor that is hurting gold is an expected rise in U.S. interest rates. Wednesday and Thursday, Federal Reserve Chair Janet Yellen testified before Congress and reiterated that the Federal Open Market Committee feels it would be appropriate to raise interest rates later this year.
“The key headwind for gold right now remains the possibility of a rate hike in September,” said Julian Jessop, head of commodity research at Capital Economics.
Nick Exarhos, senior economist at CIBC World Markets, agreed that potentially higher interest rates will be gold negative in the short-term.
“Given Yellen’s comments this week, the U.S. dollar is going to continue to gain steam and that will make it difficult for gold,” he said.
Of course not all the analysts are bearish on the yellow metal; some note that the selloff is overdone and markets could see a technical bounce next week.
“Gold is headed up next week for the simple reason that everyone thinks it’s going down,” said Adam Button, currency analyst at Forexlive.com. However, Button is not very bullish in the short-term, adding, “But over the next few weeks it will go down in flames.”
George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures, said that it doesn’t pay to try to chase the market lower so he is sitting on the sidelines waiting for buyers to re-enter the market.
“The mood is very dark but you have the potential for a fairly significant rebound,” he said. “There are a lot of shorts in the market and a few higher closes could be enough to spook them.”
Although the majority of retail investors are bearish on gold, there are still some who see potential in the marketplace. Peter Gegraaf, a commentator on Kitco.com, said that he expects prices to bounce off current lows and rally for the rest of the year.
“The seasonal trend is for gold to bottom in June-July and the commercial traders have covered most of their short positions,” he said.
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By Neils Christensen of Kitco News; nchristensen@kitco.com
Follow Neils Christensen @neils_C
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