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Optimism For Gold Next Week As Metal Pops Friday - Kitco's Weekly Survey

(Kitco News) - A volatile week for gold, to say the least, and investors seem to be more optimistic on the yellow metal for next week, this according to Kitco News’ weekly Wall St vs. Main St survey.

After posting four consecutive negative daily closes and after Thursday’s biggest one-day loss since December, February comex gold futures rebounded early Friday as U.S. equities took a hit and as investors searched for a safe haven. Comex February gold neared $1,100 an ounce in intraday trading and was last quoted up $16.70 at $1,090.30 an ounce.

Investor sentiment for gold continues to improve with a majority of retail investors expecting higher prices next week. Of the 307 participants in Kitco’s online survey, 157, or 51%, are bullish on gold in the short term. Meanwhile, a total of 97 participants, or 32%, are bearish, and 53, or 17%, are neutral on prices.

“Gold will drop to $1,000 an ounce.  I would be a buyer at that price,” said one survey participant in an email Thursday. “The last market drop wiped a lot of investors out and what is left have no desire to come into the market again until the bloods flows in the street.”

Mirroring retail investors’ sentiment, a majority of market professionals are calling for higher gold next week. Out of 34 market experts contacted, 13 responded, of which eight, or 62%, said they expect to see higher prices next week; two professionals, or 15%, said they see lower prices; and three, or 23%, are neutral on gold. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

According to the analysts, safe-haven buying as well as corrections in the U.S. dollar and equity markets should play in gold’s favor next week. 

“I still think gold is climbing up out of a base with USD peaking and has the potential to run,” said Colin Cieszynski, senior market strategist at CMC markets. “Markets are likely to remain volatile and we could see some big swings for gold during the week again but overall, I think it will continue to inch its way higher.”

Also bullish is Ken Morrison, editor of the newsletter Morrison on the Markets, who said gold should be able to resume its rally into next week. “My target for the week is first resistance at $1,100-$1,110,” he said. “With uncertainty at a high level and the dollar appearing to roll over, my Q1 target for gold remains $1,125-40'ish.”

Veteran commodity advisor Robert Tebbutt argued that although he is bullish gold, he expects a gradual rise in prices moving forward. “We have seen the bottom,” he said. “I am looking for this week to show higher prices and though there may be weeks when gold does not rise, overall, I expect more up weeks than down from now on.”

However, not all calls were positive for the yellow metal, as some analysts expect price pressure – or, at least, “sideways” trading – to continue.

Kitco senior technical analyst Jim Wyckoff said he is neutral on gold next week as safe-haven buying, which would support prices, will be countered by pressure from the weak raw commodity sector.

Gold could also be pressured on the currency front, noted Richard Baker, editor of the Eureka Miner Report.

“It is encouraging that gold has regained safe-haven status again as global equities plummet but it faces fierce competition from the Japanese yen and U.S. Treasuries with the 10-year dipping briefly below 2%,” he said. “I believe it likely that some of the early pop seen this Friday will fade in the coming shortened market week.”

Baker’s target price for gold next week is $1,080 an ounce.

Kitco Gold Survey

Wall Street

Bullish
Bearish
Neutral

VS

Main Street

Bullish
Bearish
Neutral

By Sarah Benali of Kitco News; sbenali@kitco.com
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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