Gold Loses Some Shine But Survey Voters Still Lean Higher
Editor's Note: Kitco readers, have your say! Check out our newest feature – KITCO CHAT! – where you can share your comments and ask questions directly to us.
(Kitco News) - A strong U.S. jobs report for July blunted some of the short-term enthusiasm for gold, but wasn’t enough to make respondents in the weekly Kitco News gold survey bearish.
The largest bloc of voters in both the Wall Street and Main Street polls look for the yellow metal to rise again next week. In each survey, however, the bull camp was less than 50% of the total votes.
Gold is headed for a lower weekly finish, with most of the damage coming Friday as the U.S. government reported a stronger-than-expected rise of 209,000 in July employment. The stronger number means continued potential for another U.S. interest-rate hike this year, observers said.
Seventeen market professionals took part in a Kitco News Wall Street survey. Eight voters, or 48%, see gold prices rising by the end of next week. Seven, or 41%, said lower, while the other two, or 12%, see a sideways market.
The Kitco online Main Street poll resulted in 714 votes, with 342 participants, or 48%, calling for gold to climb over the next week. Another 272 voters, or 38%, said that gold will fall, while 100, or 14%, were neutral.
In last Friday's survey for the current week, 71% of Wall Street voters and 65% of Main Street called for gold to rise this week. As of 11:11 a.m. EDT, Comex December gold was down 1% the week to $1,263.10 an ounce.
So far in 2017, but not counting the current week, Wall Street forecasters collectively were right 19 of 29 times for a winning percentage of 66%. Main Street was right 18 of 28 times for 64%.
Sean Lusk, director of commercial hedging with Walsh Trading, suggested gold prices will bounce after initial weakness in the aftermath of the U.S. jobs report.
“I think after this price break, you’ll see more buying come in,” he said, suggesting the U.S. dollar may remain soft. Gold could briefly fall to the mid to low $1,250s area, he continued, but then may remain underpinned by more “political chaos going forward.” So Lusk’s bottom line: “I wouldn’t want to be short here. I think we’re in an environment where dips will be bought.”
Bill Baruch, senior market analyst at iiTrader.com, is also upbeat on gold. He said that while the employment data was good, it also was not enough to reverse the impact of a previous string of disappointing economic reports. Further, he said the jobs report wasn’t robust enough to increase expectations for more aggressive Federal Reserve monetary policy, and the absence of this will ultimately be positive for gold.
Meanwhile, Kevin Grady, president of Phoenix Futures and Options LLC, looks for the metal to slide some more after the jobs data.
“It looks like those [jobs numbers] are positive for the economy,” Grady said. “Although it [the next expected U.S. interest-rate hike] is not going to be until December – it confirms that it will be in December. That is going to be a strong headwind for gold.”
The market has been helped lately by “strong buying” from speculators on pullbacks, he said, with physical demand in India and other key buying nations reportedly soft. Still, “I think there is going to be sellers of rallies. I’m looking for around $1,275 to be good resistance for us.”
Colin Cieszynski, senior market analyst at CMC Markets, said that he is bearish on gold as the market wasn’t able to break above a technical trendline from the December low and the May low. He added that momentum indicators are also starting to roll over, highlighting the risk of lower prices. Ralph Preston, principal with Heritage West Financial, also said lower, since the market “appears to be stalling” after recent gains.
Fawad Razaqzada, technical analyst at City Index, is neutral on gold.
“Right now, we are in the middle of its year-long trend and until we get a break out above $1,300 or below $1,200, everything in the middle is just noise.”
Here is a sampling of thoughts from Kitco Main Street voters on Kitco’s commenting Kitco Chat: