Retail Investors, Analysts Bullish On Gold As Prices Hit 13-Month HighBy Neils Christensen of Kitco News
Friday March 04, 2016 12:16
(Kitco News) - The majority of retail investors and market analysts remain bullish on gold, with most deciding to stay on the sidelines, not wanting to step in front of the momentum, as prices reach a 13-month high at the end of the week.
After two weeks of consolidation, Comex April gold futures prepare to end the week with gains just under 4%. As of 12:11 p.m. EST, April gold was trading at $1,268.70 an ounce, up 0.83% on the day.
Looking ahead to next week, The latest results of the Kitco News Wall Street vs. Main Street Gold Survey shows market sentiment remains extremely strong with prices expected to move higher in the near-term, with some having a price target near $1,300 an ounce.
This week, 1,254 people participated in Kitco’s online survey, of which 1,047 participants, or 83%, said they are bullish on gold next week. At the same time, 121 people, or 10%, said they are bearish on gold next week, and 86 people, or 7%, are neutral.
A majority of market analysts also expect gold prices to move higher in the near term. Out of 34 market experts contacted, 19 responded, of which 10, or 53%, said they expect to see higher prices next week. Four professionals, or 21%, said they see lower prices, and five analysts, or 26%, are neutral on the market. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
Sentiment among retail investors has remained relatively unchanged since the start of the year; however one interesting trend is that an increasing number of bullish analysts are now stepping to the sidelines as the market pushes into significantly overbought territory.
“At some point the market has to digest the moves we have seen,” said George Gero, managing director at RBC Wealth Management.
Gero added that despite the risk of consolidation in the near-term, the trend is definitely higher as hedge funds continue to jump into the metal.
“Gold has been the best performing so far this year and that has attracted a lot of attention and now clients are asking their money managers to invest,” he said. “Of course funds are buying but nobody wants to sell, all the bears are leaving the woods.”
Ronald-Peter Stoeferle, fund manager at Incrementum AG and the author of the In Gold We Trust report agreed that the trend for gold is defiantly higher as the market is benefiting from an “explosive cocktail” of factors.
However, he said that he is neutral on gold in the near-term as sentiment signals overbought levels.
Other analysts are bullish on the yellow metal, noting that technical and fundamental news should continue to support higher prices in the near-term.
“The technical picture for gold was almost perfect and we were just waiting to see which way the price would break out,” said Adam Button, currency strategist at Forexlive.com. “Everything is lining up for gold and it is behaving exactly as it should.”
Bart Melek, head of commodity strategy at TD Securities, noted that gold is on track to hit the bank’s first quarter price target of $1,300, a target it has had in place since the start of the year.
“There are many reasons to think that gold will rally to $1,300,” he said.