Wall Street, Main Street See Higher Gold Prices Next Week
Friday September 25, 2015 12:12
(Kitco News) - More bears are back in the marketplace, but still a majority of retail investors and market professional expect to see higher gold prices next week, according to the Kitco New Wall Street vs. Main Street Gold Survey.
After strong a strong rally Thursday, Comex gold prices are preparing to end its second consecutive week in positive territory, showing gains of 0.5%.
Looking ahead, a clear majority of retail investors remain bullish on the yellow metal, but down from strong market optimism seen in the previous week. This week, 301 people participated in Kitco’s online survey. Of those respondents, 154, or 51%, are bullish on gold in the short-term. At the same time, 112 people, or 37%, are bearish and 35, or 12%, are neutral on gold prices.
The previous survey showed that 57% of respondents were expecting to see higher prices.
The majority of market professionals were also optimistic on gold next week, but it wasn’t as one-sided as the previous week.
Out of 35 market experts contacted, 19 responded, of which 10, or 53%, said they expect to see higher prices next week. At the same time, seven analysts, or 37%, expect to see lower prices, and two people, or 11%, are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
Last week 75% of market analysts surveyed were bullish on gold and only one person was bearish.
Although retail investors remain positive on the gold market, some are expecting to see increased uncertainty and higher volatility. Barry, from Chicago, Ill., said that he remains bullish on gold in the long term, but he added that he expects prices to be unpredictable next week as the market battles between deflation fears and a faltering global economy.
He also said that one factor that could be positive for gold next week will be a possible government shutdown, which will lead to a battle over the debt ceiling.
Market analysts have also noted a possible government shutdown as a positive element for gold next week; however, the surprise resignation of House Speaker John Boehner has reduced the chances of a government shutdown.
Among the bullish analysts, one factor that will continue to support gold is the fact that the Federal Reserve will be reluctant to hike rates this year, despite the recent comments from Fed Chair Janet Yellen. Thursday evening, in a speech at the University of Massachusetts in Amherst, Yellen said that the central bank remains on track to raise interest rates by the end of the year.
However, Colin Cieszynski, senior market strategist at CMC Markets, said that he expects markets to adjust their expectations and price in a less aggressive move. He added that markets have more than priced in a slight increase in the Federal funds rate.
“There’s room for USD to come back down and gold to rebound over the next several weeks,” he said.
Sean Lusk, director of the commercial hedging division at Walsh Trading, said that although Yellen was hawkish in her comments Thursday, the central bank has a habit of making hawkish comments at public events and then turn dovish during monetary policy meetings.
“I think people are going to start to realize that the Fed is not in any hurry to raise rates and in that environment, I think, dips in the market are going to be bought,” he said.
Among the bearish analysts, a stronger U.S. dollar and equity markets are expected to be gold’s biggest challenge in the near-term.