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Main St., Wall St. Look For Gold To Extend Rally

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Kitco Gold Survey

Wall Street



Main Street


(Kitco News) - Main Street and Wall Street look for the gold market to extend its three-month highs next week on ideas the Federal Reserve will hike interest rates cautiously, political uncertainty and technical-chart follow-through.

Twenty traders and analysts took part in a weekly Wall Street survey. Thirteen voters, or 65%, see gold prices rising by next Friday. Two, or 10%, said lower, while five voters, or 25%, are neutral or look for a sideways market.

Meanwhile, 974 respondents took part in a Main Street online survey. A total of 661 participants, or 68%, called for gold to rise, while 221, or 23%, saw lower prices. The remaining 92 voters, or 9%, were neutral.

In last Friday’s survey, 59% of Wall Street voters and 64% of Main Street participants called for gold prices to increase in the current week. Around 11 a.m. EST, they were right, as Comex April gold was up 1.5% for the week so far to $1,257.20 an ounce. The metal peaked Friday at $1,261.20, its most muscular level since mid-November.

Going back to mid-May, Wall Street forecasted correctly 25 times and was wrong 13 times, a winning percentage of 66%. Main Street had a 24-14 mark during this period for 63%.

Ira Epstein, director of the Ira Epstein division of Linn & Associates, looks for gold to rise some more, commenting that polls keep showing the Netherlands and France with political parties winning over people against immigration.

“People won’t forget Brexit or President Trump’s win when the pollsters said they wouldn’t win,” Epstein said. “As such, once the Fed Minutes didn’t solidify a March rate hike, gold made new highs for this move.”

Phillip Streible, senior market strategist with RJO Futures, also commented that gold futures will continue to build on the idea that the Federal Reserve will continue to maintain low interest rates.

“Geopolitical uncertainty, along with uncertainty surrounding Trump’s policies, French elections and Greek bailout, should also support,” he said. “I believe gold will continue to move higher to $1,300 over the next couple weeks. “

Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, said the dollar is overvalued, although concerns elsewhere – particularly in Europe – are keeping a bid under the safe-haven currency. “But gold seems to have broken out of its recent range, so I suspect next week we shall see gold up.”

Jim Wyckoff, senior technical analyst with Kitco, also said higher, citing the technical momentum.

“Importantly, when examining technical charts, a price uptrend strongly suggests the path of least resistance for prices will continue to be sideways to higher on that chart, until the downtrend is negated,” Wyckoff said.

Ken Morrison, editor of the newsletter Morrison on the Markets, looks for gold to be in a $1,250 to $1,270 range.

“Gold achieved the $1,260 upside target we cited in last week's survey, now having clawed its way back $130-plus to the breakdown level of Nov. 10,” he said. “Despite the spike in open interest accompanying Thursday's rally, indicating rising investor interest, it will be no small challenge to overcome near-term resistance at $1,260. Trump's address to Congress next week may fall short of investor expectations on the specifics and timeline for his major healthcare, tax, and trade policies. Gold does well in an uncertain environment, but the week ahead may be a narrow-range affair $1,250-$1,270.”

Sean Lusk, director of commercial hedging with Walsh Trading, sees potential for a pullback, although he adds that price dips may well become buying opportunities.

“Look for some month-end profit-taking,” he said. Traders may lighten up ahead of a Federal Reserve meeting next month and the next U.S. jobs report, he continued.

“If you’re a bull, you have to love it,” he said of the recent rally. Still, some longs may look to capture those profits rather than waiting too long and risk losing them. “They might take a little bit off the table.”

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.