Wall St., Main St. Look For Gold To Rise Next Week
(Kitco News) - Wall Street and Main Street alike look for stronger gold prices next week, based on the weekly Kitco News gold survey.
Eighteen market professionals took part in a Wall Street survey. Nine voters, or 50%, see gold prices rising by next Friday. Four, or 22%, said lower, while five voters, or 28%, look for a sideways market.
Meanwhile,1,205 Kitco readers submitted votes in an online Main Street poll. A total of 723 voters, or 60%, are bullish. Another 305, or 25%, say that gold will fall, while 177, or 15%, are neutral.
In last Friday’s survey for the current week, 65% of Wall Street voters and 70% of Main Street voters predicted gold would rise. Just before 11 a.m. EDT, Comex June gold was 0.2% lower for the week at $1,249.10 an ounce. Assuming the metal in fact finishes the week lower, this will break a four-week winning streak for Wall Street.
So far in 2017 but not counting the current week, Wall Street called gold’s direction correctly nine of 12 times for a winning percentage of 75%, while Main Street was 7-5 for 58%.
Phil Flynn, senior market analyst with Price Futures Group, sees higher prices but says it may be a “bit of a struggle,” pointing out that headwinds have come from recent comments from Federal Reserve officials giving mixed signals on how aggressive policymakers will be when upping U.S. interest rates. Meanwhile, one big event next week will be the monthly U.S. nonfarm payrolls report due out Friday.
“My gut feeling is we’ve priced in some very strong numbers or expectations (for payrolls),” Flynn says. “So I think it’s likely we’ll see the dollar pull back a little bit and gold will rally, although not by a lot.”
Kevin Grady was one of the few Wall Street voters who predicted (correctly so far) that gold would fall this week, citing an expectation for long liquidation by traders exiting the April futures instead of rolling positions forward into future months. However, now that the rollover period is out of the way, he looks for gold to rise in the next week.
“A lot of people have liquidated a lot of Aprils (contracts) rather than rolling those positions,” Grady said, citing a big weekly drop in the number of Comex open positions. However, he continued, “There is a big difference between getting out of your longs and getting short at these levels. I don’t see any major reasons for getting short. Interest-rate hikes aren’t going to be coming in the next week or two. So we could get a little bit of a pop here.”
Meanwhile, Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, looks for gold to ease some more as it consolidates the gains that took the metal to a one-month high on Monday.
“We’ve just had a good run in gold, and one of the factors that had gold up is changing—the dollar seems to be turning,” Day said. “All this is very short term, and we remain very bullish on gold in the medium and longer term. It just needs a pause.”
Ken Morrison offered this view:
“Open interest has declined 30,000 contracts (7%) the past two days as the rally again stalled at $1,260 as it did 30 days ago. All the decline in open interest has occurred in the April contract prior to the first-notice delivery period, indicating longs opted to go to the sideline instead of roll positions forward. The head-and-shoulders bottom pattern off the mid-March low at $1,200 should see a pullback to $1,220-25 to complete the pattern. From there we'll have to gauge the next trend but it's important to keep in mind the uptrend from the mid-December low remains broken so there's a slight negative bias over the coming four (to) six weeks that could see gold back toward $1,200. I expect half that decline from current levels occurs next week.”
Henry To, analyst at CB Capital Partners, is among those who sees a sideways market.
“I have been saying since a couple of weeks ago that it’d be very difficult for the price of gold to break above $1,250 an ounce decisively unless there emerges some kind of geopolitical surprise, such as a Le Pen win in the French election,” To said. “Based on our research, the Chinese economic re-acceleration that started in early 2016 is drawing to a close, as the People’s Central Bank of China tightens monetary policy and as the Chinese government implements macro-prudential policies to halt the rise in Chinese property prices. Chinese consumer spending growth should disappoint as a result. Since about one-quarter of the world’s demand of gold is from Chinese consumers and investors, this should lead to a stagnant or even lower gold price over the next several months.”
Meanwhile, here is a sampling of thoughts from some Kitco Main Street voters on Kitco’s new commenting feature – Kitco Chat – which began this month: