Main St., Wall St. Look For Gold Rally To Continue
Friday February 03, 2017 11:24
(Kitco News) - Main Street and Wall Street both look for gold’s recent strength to continue next week, according to the Kitco News gold survey.
Eighteen traders and analysts took part in a weekly Wall Street survey. Thirteen voters, or 72%, see gold prices rising by next Friday. Three, or 17%, said lower, while two voters, or 11%, look for a sideways market.
There was heavier-than-normal participation in a Main Street online survey, with 2,234 respondents. A total of 1,430 participants, or 64%, called for gold to rise, while 607, or 27%, saw lower prices. The remaining 197 voters, or 9%, were neutral.
In last Friday’s survey, 38% of Wall Street voters and 49% of Main Street participants – the largest bloc of voters in each poll -- called for gold to decline in the current week. Around 11:15 a.m. EST, gold had risen instead, with Comex April gold up 2.4% for the week so far to $1,219.80 an ounce.
Going back to mid-May when this reporter started handling the Kitco News survey, Wall Street forecast correctly 23 times and was wrong 13 times, a winning percentage of 64%. Main Street had a 22-14 mark during this period for 61%.
“I believe next week we will see a continuation of the rally we’re seeing late in the week. The reason is partly because of the increased geopolitical tensions with Iran,” said Phil Flynn, senior market analyst with Price Futures Group. He later added, “With the improved prices of commodities and the upward momentum overall in the economy…it should bode well for gold next week due to the reigniting of inflation down the road or expectations we’ll see inflation heat up over the coming months.”
Kevin Grady, president of Phoenix Futures and Options LLC, also called for gold to rise, citing potential for bulls to re-enter the market after many had exited from positions during the rollover out of the February futures. They may be encouraged now that another Federal Reserve meeting is out of the way and interest-rate futures are pricing in only a 30% probability of another rate hike before June, Grady added. He also looks for more of a correction lower in the U.S. dollar, particularly as President Donald Trump seemingly wants a weaker currency.
Charlie Nedoss, senior market strategist with LaSalle Futures Group, looks for gold’s recent upward momentum to continue as long as the market remains above the 10- and 20-day moving averages. .
ForexLive’s Adam Button also says sees stronger gold, commenting: “The market is badly underestimating that Trump abandons the longstanding strong-dollar policy. If that’s the case, gold could easily rally 20% this year.”
Ralph Preston, principal with Heritage West Financial, looks for lower prices, although he adds that this could hinge on where the market ends up on Friday.
“But here is the thing -- gold needs to close below $1,221 today,” Preston said. “If gold does close above $1,221 today, that would suggest a multi-week rally.”
For now, Ken Morrison, editor of the newsletter Morrison on the Markets, is neutral for the near term.
“The mini head-and-shoulders bottom pattern that developed over the past six weeks indicates the near term may be a period of sideways consolidation to form the right shoulder,” Morrison said. “The current pattern is a part of a more significant H&S pattern, with the mid-December low serving as the head. I look for sideways (neutral) trade in the week ahead, but breaking through the neckline at $1,225 would set up a retest of resistance of $1,240, something I expect over the next two to four weeks.”
By Allen Sykora of Kitco News; firstname.lastname@example.org