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Gold Survey

Main St. Predominately Bearish On Gold While Wall St. Sentiment Remains Mixed

(Kitco News) - After hitting a 5.5-year low Wednesday, gold prices seemed to trade moderately higher Friday. However, most retail investors remain bearish on the metal’s price for the week ahead while market professionals seem undecided, according to Kitco’s Weekly Gold Survey.

December Comex gold futures hit a low of $1,062 an ounce Wednesday, a level last seen over half a decade ago, which was followed with short covering and bargain hunting in the market on these lower prices. On Friday, prices hit an intraday high of $1,087.2/oz but fell lower and now hover around $1,075 an ounce. Prices remain under pressure on the back of a resilient U.S. dollar and as markets expect the U.S. Federal Reserve to raise interest rates next month, some analysts said.

There were 615 retail investors who participated in Kitco’s online survey this week, and the sentiment was predominately negative on gold in the short term. The majority expect gold prices to make a move lower next week with 342 voters, or 56%, making bearish calls on the metal. The remaining 212 participants, or 34%, see higher prices, while 61 voters, or 10%, are neutral on prices for the week ahead.  

However, market professionals came head to head with their bullish and bearish outlooks for gold next week. Of the 37 participants contacted, 10 responded, of which 4, or 40%, say prices should move up. The remaining 4, or 40%, are bearish while 2 participants, 20%, are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

Market veteran and precious metals strategist for RBC Capital Markets George Gero said he remains constructive and “somewhat bullish” on gold next week.

“The Fed raise is priced in and anticipated,” he said, adding that jewelry and coin demand should be better at these lower gold prices.

Adrian Day of Adrian Day Asset Management mirrored Gero’s thoughts in that the Fed rate hike is now priced in and may be positive for gold.

“It removes this Sword of Damocles hanging over the market, and it is very clear that there will not be a rapid series of aggressive rate hikes; one tiny increase is meaningless for gold, whereas the constant threats have weighed on the metal,” he continued.

Ken Morrison, editor of the newsletter Morrison on the Markets, said he expects a “counter-trend rally” and looks to the $1,095-1,100 level for gold.

Ralph Preston of Heritage West Financial, however, said he is bearish and even called for “an extreme spike low” in gold.

Richard Baker, editor of the Eureka Miner Report, agreed with Preston and expects continued pressure on all metals, including gold.

“Given the shorts lined up against the red metal (copper), strong dollar, low demand and high inventories there could be more pain ahead for the metals complex,” Baker said. “A washout low for copper will exert more downward pressure on gold,” he added.

Colin Cieszynski, senior market strategist at CMC Markets, said he is netural on gold and expects the metal to remain range bound next week, especially as there is a holiday in the U.S.

“I think gold has become oversold and has started to base build in the $1,070 to $1,100 range. With the U.S. closed for holidays for half the week, I think gold will remain within this range,” he said.

Kitco’s senior market analyst Jim Wyckoff, mirrored the neutral sentiment and noted that there are “no early clues of a market bottom being close at hand.”

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By Sarah Benali of Kitco News;
Follow me on Twitter @SdBenali



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 precious metal products, 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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