Main Street Bullish, Wall Street Leans Bearish But Difference NarrowsBy Allen Sykora of Kitco News
Friday May 27, 2016 12:02
(Kitco News) - Retail investors and market professionals remain on opposite side of the fences, although they’re moving toward one another, according to the latest results of the Kitco News Wall Street vs. Main Street gold survey.
This week, Kitco’s online survey received 790 votes. A total of 499 respondents, or 51%, said they were bullish in the week ahead, while 278, or 35%, were bearish. The neutral votes totaled 112, or 14%.
Meanwhile, 20 analysts and traders took part in a survey for market professionals. The largest chunk – nine, or 45% -- looked for prices to ease next week. Seven participants, or 35%, called for a rise, while four, or 20%, were neutral.
In last week’s survey, 56% of retail investors were bullish, while the largest chunk of market professionals – 45% -- were bearish. Gold did fall, with the Comex June futures down by $40.50 for the week as of 11:25 a.m. EDT to $1,212.40 an ounce.
Greg Harmon, founder of Dragonfly Capital, looks for the downward momentum to last into next week. The trend “has changed to down after falling through rising trend support,” he said.
Colin Cieszynski, chief market analyst in Canada for CMC Markets, also looks for more downside.
“I don’t think the adjustment to a more hawkish Fed and the outflow of capital from defensive havens like gold is over yet,” he said. “G7 (Group of Seven) leaders declining to get caught up in Japanese PM (Prime Minister Shinzo) Abe's claims of crisis indicate that the point of maximum risk and fear was passed earlier this year and is now fading.”
Others, meanwhile, figure gold is due to stop its recent slide and turn higher again. The metal remains sharply higher for the year.
“The market has been fretting about the Federal Reserve raising interest rates,” said Phil Flynn, senior market strategist with Price Futures Group. “It’s been down so many days in a row that it’s probably oversold and due for a little bit of a recovery.”
Richard Baker, editor of the Eureka Miner Report, offered a similar view.
“The good news is that there is solid support below further declines so it is likely that the possibility of a U.S. Fed rate hike next month is priced in,” he said. “I expect some recovery next week.”
Added Ken Morrison, editor of the newsletter Morrison on the Markets, in an e-mail: “The $50 pullback in gold has relieved the imbalance of speculative positions where the ratio of long to short positions had gotten to 90% recently. That open interest has declined @ 90,000 contracts (14%) on this pullback will provide a better base of support. I'm expecting the week ahead will see a modest rally to @ $1,240-45 with over head resistance now @ $1250.”