Chicago Bulls vs. Bears: Where Is Gold Headed?By Sarah Benali of Kitco News
Thursday October 06, 2016 11:32
(Kitco News) - Famed for its sports teams, Chicago is also home to many traders, who seem to be mixed on gold and silver prices ahead of Friday’s U.S. jobs report.
Metals continue to trade under pressure Thursday as markets price in a higher chance of a Federal Reserve rate hike this year, with December Comex gold last down 0.99% at $1,256 an ounce and December silver down 2.23% at $17.30.
“It’s ugly,” Todd ‘Bubba’ Horwitz, host of The Bubba Show and founder of BubbaTrading.com, told Kitco News. But, he still remains bullish longer term, expecting gold to hold support.
Phil Streible of RJO Futures isn’t as optimistic, at least on gold, as positive jobs data would spark another wave of liquidation.
“It seems bears have control of the market,” he said. “We need to hold $1,250. If we break below there, we’ll probably go down to the May low of $1,214.60.”
Although Streible said that there is also a chance for silver to fall back down to $16 an ounce on stronger data, it still remains one of his “favorite metals of all time.”
To iiTrader’s chief market strategist Bill Baruch, the important thing for investors to understand is that fundamentals aren’t driving the market right now; instead, it is the expectations of a Fed rate hike, and that means prices can go either way.
“What you have to understand is that this perception right now in a very emotional market can shift very quickly,” he said.
Over the short term, he said there is a chance gold could move higher if the jobs report is a miss. Growth in nonfarm payrolls is forecast to come in at around 171,000.
“If tomorrow’s nonfarm payrolls report misses – say 150,000 jobs or less – I expect us to be back up at $1,300 by Sunday or Monday, and silver to be back up above $18.”
Baruch added that he remains bullish on the metals longer term, noting that he sees a pattern in the marketplace right now, similar to what happened last year ahead of the Fed’s first rate increase in nearly a decade.
“We saw something similar to this last year in November and December when the Fed was going to hike rates and we had good nonfarm payrolls report in November, and the market sold off,” he said.
“Once it was able to fish the bottom, the market rallied because all the sellers have already sold.”