Wall Street, Main Street At Odds Again As Sentiment FallsBy Neils Christensen of Kitco News
Friday April 15, 2016 12:59
(Kitco News) - Sentiment is once again shifting as gold has been unable to retest its March 13-month highs, according to latest results of the Kitco News Wall Street Vs. Main Street Gold Survey.
After being on the same page in the precious week, the two sides of the survey are at odds with each other with more market experts forecasting lower gold prices next week and the majority of retail investors expecting higher prices.
However, although there is still positive sentiment among retail investors, it has dropped significantly from the previous week. This week 748 people participated in Kitco’s online and Twitter gold surveys. Of those, 493 voters, or 66%, said they expect to see higher prices next week; at the same time, 185 people, or 25%, said they expect to see lower prices next week; and 70 people, or 9%, are neutral on the market.
In the previous survey, 80% of respondents were bullish on gold.
The market professional survey is also seeing a lot more volatility, with the bearish side having a slight advantage. Out of 36 market experts contacted, 17 responded, of which four professionals, or 24%, said they are bullish on gold. Eight professionals, or 47%, said they are bearish, and five analysts, or 25%, are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts. Last week 60% of Wall Street participants were bearish on gold. According to comments from market participants, sentiment has shifted as gold prices fell sharply after hitting a five-week high early in the week at $1,264.70 an ounce.
“The failed rally earlier this week dimmed chances it would return to the March high and Thursday's close below the 50-day moving average was gold's first since mid-January,” said Ken Morrison, editor of the newsletter Morrison on The Markets. “This sets up at least another test of support at $1,210 and possibly could be the pullback that breaks below $1,200.”
Greg Harmon, founder of Dragonfly Capital, said that he is bearish on gold in the near term as the price has dropped below the 50-day moving average. He added that the old target of $1,190 is back on the table.
Colin Ciesznyski, senior market strategist at CMC Markets, said that he is bearish on gold in the near term as the safe-haven sentiment that drove the gold market in the first quarter is starting to dissipate.
“China's economy isn't collapsing and so far earnings haven't been as bad as people were expecting either,” he said. “Because of this capital may continue to exit defensive plays like gold for risk markets.”
However, not all analysts are bearish on prices. Henry To, from CB Capital Partners, said that weakness in the global economy should continue to support gold in the near term.
“The bullish narrative since early February has not changed. Inflation is finally rising in both the U.S. and the euro zone, which means both U.S. and European investors are now seeking gold as an inflation hedge,” he said.