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Wall Street, Main Street Look For Gold Rally To Continue

(Kitco News) - Wall Street and Main Street are both bullish on gold next week, particularly after a softer-than-forecast report on growth in U.S. gross domestic product that was released on Friday.

Kitco Gold Survey

Wall Street

Bullish
Bearish
Neutral

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Main Street

Bullish
Bearish
Neutral

Nineteen analysts and traders took part in the Wall Street survey. Sixteen, or 84%, look for gold to rise next week. Two, or 11%, are bearish, while only one vote, or 5%, was neutral.

Meanwhile, 1,008 Main Street participants submitted votes in an online survey. A total of 691 respondents, or 69%, said they were bullish for the week ahead, while 200, or 20%, were bearish. The neutral votes totaled 117, or 12%.

 
For the trading week now winding down, the largest bloc in both the Wall Street and Main Street surveys called for gold to rise. They were right. As of 11:14 a.m. EDT, Comex December gold was up by $24.70, or 1.9%, for the week to $1,356.20 an ounce.

The Wall Street crowd, in particular, is on a roll, calling gold’s weekly direction correctly in nine out of the last 11 weeks since this reporter took over the survey. Main Street is 7-4 during this time.

Wall Street’s bullish vote for next week is by a larger margin than normal.

“Gold bulls have gained some near-term technical momentum,” said Jim Wyckoff, senior technical analyst with Kitco News.

Kevin Grady, president of Phoenix Futures and Options LLC, also looks for more strength.

“The GDP numbers (1.2% growth in the second quarter) came out and didn’t look too good,” he said. “The chances for raising interest rates…the rest of the year are actually very low. I think that’s going to be giving a floor to the price of gold.”

Bob Haberkorn, senior commodities broker with RJO Futures, looks for “much higher” after the most recent U.S. economic data.

“The disappointing GDP reading…and the fact that you had weaker durable-goods and weaker housing numbers this week (means) any talk that there was this past week of a rate increase in September or even in December is out the window at this point.” 

Ira Epstein, director of the Ira Epstein division of Linn & Associates, also looks for more gains, pointing out that gold often rallies seasonally from early August into early September.

“The Bank of Japan and the Japanese government are at odds over how to handle stimulus,” he continued. “With Mr. (Prime Minister Shinzo) Abe winning the Japanese people’s confidence and his promise to stimulate the economy, I see the Bank of Japan having to come around to his way of thinking regardless of what Bank Governor (Haruhiko) Kuroda personally thinks. I look for fireworks when Mr. Abe speaks to the country next week and believe gold will benefit. If oil prices crack (below) the $40 level that is also likely to awaken some gold traders looking for a safe haven.”

Ralph Preston, principal with Heritage West Financial, is among those who anticipate a pullback in gold.

“The market’s inability to close above (the) $1,362 daily closing high for July hints that prices will search out support,” he said.

Henry To, analyst at CB Capital Partners, was the lone vote for a sideways market, citing the steep rises that have already occurred in the precious metal. On the one hand, he sees potential for U.S. dollar strength as markets assess Bank of Japan monetary policy and stress tests for European banks.

“At the same time, both Japanese and European investors should flock to gold for capital preservation and safe-have purposes as well,” he continued. “Upward pressure on gold, however, should be minimal given the huge rally it’s had in 2016 already.”

By Allen Sykora of Kitco News; asykora@kitco.com

 

 

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 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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