Wall, Main Street See Steady To Higher Gold Amid Bank ConcernsBy Allen Sykora of Kitco News
Friday September 30, 2016 11:53
(Kitco News) - Market jitters about Deutsche Bank have Wall Street and Main Street respondents in the weekly Kitco survey looking for gold to trade steady to higher next week, with bears about as rare as a grizzly strolling down a sidewalk on Manhattan Island.
Wall Street analysts looking for gold-price appreciation tended to cite safe-haven buying on worries about the strength of the German bank. Among those who see sideways prices, Wall Street participants also cite the German bank as an offsetting factor to others that might otherwise hurt gold.
Twenty analysts and traders took part in a weekly Wall Street survey. Ten participants, or 50%, see sideways prices next week, while nine, or 45%, look for higher. Only one voter, or 5%, sees gold falling.
Meanwhile, 542 Main Street participants submitted votes in an online survey, the lowest participation since January. A total of 310 respondents, or 57%, said they were bullish for the week ahead, while 166, or 31%, were bearish. The neutral votes totaled 66, or 12%.
For the current trading week now winding down, 60% of Wall Street and 74% of Main Street participants looked for gold to rise. As of 11:38 a.m. EDT, Comex December gold was down by 1.3% for the week to date to $1,324.20 an ounce.
Deutsche Bank has been a key focus for equities and gold alike on Friday.
“Deutsche Bank continues to be under pressure as hedge-fund clients begin to cut their counterparty risk to the lender who also happens to be one of the largest derivative traders in the world,” said Henry To, analyst at CB Capital Partners. “This has and will continue to erode confidence in the European financial system, which should boost safe haven-flows into gold next week.”
Bob Haberkorn, senior commodities broker with RJO Futures, echoed a similar sentiment.
“There wasn’t a lot of destruction from a technical-chart perspective (this week),” he said. “Going into next week, there is a lot of worry about the European banking sector. That should support gold and silver.”
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, also looks for stronger gold, citing “too much uncertainly in the U.S. election and more broadly geopolitically. Any number of mishaps could see gold back up.” VR Gold Letter editor Mark Leibovit also said higher, citing potential for “long overdue” U.S. dollar devaluation.
Kevin Grady, president of Phoenix Futures and Options LLC, looks for gold to be sideways amid offsetting factors.
“There are a lot of longs (bulls) in the market right now and there is no real catalyst, with the (possible) interest-rate hike in December. At least, a lot of people are assuming that’s going to happen,” he said. However, “I don’t think gold is going to wash out (to the downside) because of what’s going on with the European banks.”
He cited the troubles for not only Deutsche Bank but Commerzbank.
Sean Lusk, director of commercial hedging with Walsh Trading, also looks for sideways. The already-large net-long position in gold futures means potential for liquidation and profit-taking, while the Deutsche Bank worries mean safe-haven buying.
“We get this battle back and forth,” Lusk said.
Ralph Preston, principal with Heritage West Financial, looks for weakness.
“Viewed through the prism of the quarterly model, gold needs to close above $1,347 in order to hint that this market can continue to sustain this year’s momentum,” he said. “Market tends to test support if they can’t move past resistance and as we can see, gold is having a real problem moving past the $1,350-$1,380 resistance zone.”