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Wall Street Returns To Bullish Near-Term View On Gold

Kitco News

(Kitco News) - The majority of Wall Street participants in the Kitco News gold survey are bullish again for the first clear consensus in three weeks, joining Main Street in looking for the metal to rise by the end of trading next Friday.

Kitco Gold Survey

Wall Street



Main Street



Many figure it’s just time for gold to bounce technically – after all, markets never go one way forever – after Comex June gold futures lost $83.10 from the mid-April high to the early-May low. Some also cited the ongoing political uncertainty in the U.S.

Sixteen traders and analysts took part in a Wall Street survey. Twelve voters, or 71%, see gold prices rising by next Friday. Two, or 12%, said lower, while three voters, or 18%, were either neutral or expected sideways prices.

Meanwhile, 693 readers submitted votes in an online Main Street poll. A total of 361 voters, or 52%, are bullish. Another 239, or 34%, say that gold will fall, while 93, or 13%, are neutral.

In last Friday's survey for the current week, the largest bloc of Wall Street voters (47%) was bearish, while the largest bloc of Main Street voters (48%) was bullish. As of 11 a.m. EDT Friday, Comex June gold was slightly higher the week so far, gaining 0.3% to $1,230.70 an ounce.

So far in 2017 but not counting the current week, Wall Street forecasters collectively were right 11 of 17 times for a winning percentage of 65%. Main Street was 9-8 for 53%.

“It looks like it’s holding quite nicely” after recent weakness, said Afshin Nabavi, head of trading with MKS (Switzerland) S.A. “I wouldn’t be surprised if we trade a little bit higher.”

Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, suggested the recent pullback seems “overdone” on the basis of the fundamentals. The metal has for now held roughly around $1,220 an ounce, he added.

“So we think [gold] will recover next week based on continued unpredictability of [the] U.S. political situation, potential for further crises in Europe (Brexit talks and Greek debt talks), as well as geopolitical tensions,” Day said.

Daniel Pavilonis, senior commodities brokers with RJO Futures, also figures gold is due for a bounce after a recent sell-off.

“It looks like it’s bottomed out,” Pavilonis said. “I’m looking for a move higher. I don’t know how much higher, but it looks like we’re going to see some mean reversion after such a sell-off over the last two weeks. It’s technical – relief from this down move.”

Sean Lusk, director of commercial hedging with Walsh Trading, also said higher. “Who wants to be short with what is going on in Washington?” he asked rhetorically.

Meanwhile, currency analyst Adam Button is among those who sees gold retreating, citing expected U.S. dollar strength. Barring weak economic data, he called the dollar “an unstoppable machine, albeit in slow motion.”

Ira Epstein, director of the Ira Epstein division of Linn and Associates, said he sees steady prices for now.

“Gold needs to build a base to work from as prices had fallen under the 100-day moving average of closes for the past three days,” he said. “If it can base build here, the next test [be] will the 200-day moving average of closes at $1,258.50. Next time it closes over that average, the odds are that longer term traders will take note and begin entering the market.”

Ralph Preston, principal with Heritage West Financial, also sees a sideways market, putting support around $1,215 and resistance around $1,260.

“It looks like we are going to bounce in that range for the next week,” he said. “I’m looking for neutral. The range for the month has been established.”

Here is what two Kitco readers had to say about gold:

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.
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