Wall, Main St. Bet on Higher Gold Next Week
Eighteen traders and analysts took part in a Wall Street survey. Thirteen voters, or 72%, see gold prices rising by next Friday. Just one, or 6%, said lower, while four voters, or 22%, were either neutral or expected sideways prices.
Meanwhile, 756 readers submitted votes in an online Main Street poll. A total of 465 voters, or 62%, are bullish. Another 213, or 28%, say that gold will fall, while 78, or 10%, are neutral.
In last Friday's survey for the current week, 61% of Wall Street voters and 63% of Main Street voters were bullish. They were right as of 11 a.m. EDT Friday, when Comex August gold was 1% higher for the week so far to $1,270.70 per ounce and hit a nearly four-week high of $1,271.50.
So far in 2017 but not counting the current week, Wall Street forecasters collectively were right 12 of 19 times for a winning percentage of 63%. Main Street was 11-8 for 58%.
“We are seeing some momentum in gold at the end of the week,” said Phil Flynn, senior market analyst with at Price Futures Group. “We’ve already factored in that the Fed is going to be raising rates….That could lead to some weakness in the dollar, which should give gold some more upside. On top of that, we see more threats of terrorism, which should lead to some safe-haven buying.”
Charles Nedoss, senior market strategist with LaSalle Futures Group, cited an improving technical posture with the 10-day moving average in August gold, which now has the most open positions, working on a crossover above the 200-day. If the market can post a close above $1,280 an ounce, August gold may well top the 2017 high of $1,300.30 hit on April 17, he continued. “If you close above $1,280, that will generate enough short covering to take us up the next 20 bucks.”
Sean Lusk, director of commercial hedging Walsh Trading, commented that few speculators want to hold short, or bearish, positions in the futures market at the moment.
“Economic data is weakening and there are a lot of geopolitical concerns,” Lusk said. “It’s the same old story. I just think the path of least resistance is obviously to the upside. I think we’re going to have a pullback in stocks as we get into next week, and that will provide a further push to the upside [in gold].”
Ken Morrison, editor of the newsletter Morrison on the Markets, also looks for more gains, citing gold’s ability to rally lately even when the U.S. dollar was recovering, a departure from the normal inverse relationship between the two.
“The chart pattern and recent rise in open interest during the price consolidation of the past few days indicates something besides dollar weakness is now attracting new interest in gold,” Morrison said. “It goes against my instinct to bet gold can rise along with the stronger dollar, but the flagging chart pattern indicates the path of least resistance for gold is higher in the near term.”
Kevin Grady, president of Phoenix Futures and Options LLC, described himself as “slightly bearish” for next week. He cited a still-high probability of a June rate hike by the Federal Reserve, based on the Federal fund futures. “I believe that is the reason there are sellers at this level,” he said.
Here is a sampling of thoughts from some Kitco Main Street voters on Kitco’s new commenting system called Kitco Chat: