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Wall St., Main St. See Gold Shining On Expectations For Dovish Fed

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(Kitco News) - Wall Street and Main Street look for gold to rise next week, based on the weekly Kitco News gold survey.

Kitco Gold Survey

Wall Street

Bullish
Bearish
Neutral

VS

Main Street

Bullish
Bearish
Neutral

Traders cited expectations for a dovish Federal Reserve and softness in the U.S. dollar. The market was range-bound much of this week while participants waited for a Friday speech by Fed Chair Janet Yellen, although she ended up addressing regulations rather than monetary policy, at least in her prepared testimony.

Fifteen market professionals took part in a Kitco News Wall Street survey. Eleven voters, or 73%, see gold prices rising by the end of next week. There were two votes, or 13%, for both lower and sideways prices.

The Kitco online Main Street poll resulted in 788 votes, with 375 participants, or 48%, calling for gold to climb over the next week. Another 340 voters, or 43%, said that gold will fall, while 71, or 9%, were neutral.

In last Friday's survey for the current week, 78% of Wall Street voters and 65% of Main Street called for gold to rise this week. As of 11:05 a.m. EDT,  Comex December gold was up 0.5% for the week to $1,298.60 an ounce.

So far in 2017, but not counting the current week, Wall Street forecasters collectively were right 20 of 32 times for a winning percentage of 63%. Main Street was right 19 of 31 times for 61%.

Sean Lusk, director of commercial hedging with Walsh Trading, is among those looking for gains due to perceived dovishness from the Fed and U.S. dollar weakness.

“New highs can be scored,” Lusk said. “It looks like the stock market is stealing all of the thunder. But ahead of the Labor Day weekend, we’ll see seasonal buying….It looks like all signs are pointing higher for the next week.”

Bob Haberkorn, senior commodities broker with RJO Futures, also said higher in large part due to a dovish Fed. While Yellen did not address interest rates in her prepared remarks, Dallas Fed President Robert Kaplan said policymakers need to be “patient” on further rate hikes, Haberkorn pointed out.

“We get a lot of geopolitical headlines, but at the end of the day, the main driver in gold between now and the end of the year is going to be the Fed,” Haberkorn said.

Afshin Nabavi, head of trading at trading house MKS (Switzerland) SA, suggested the market may be due for a breakout either to the upside or downside after being stuck in a trading range of $1,282 to $1,292 lately. “I would guess a break towards $1,300 next week ,” he said.

Richard Baker, editor of the Eureka Miner Report, said that “with the upcoming debt ceiling quagmire and simmering geopolitical tensions, gold should remain in bull mode with a shot at $1,310 per ounce next week. Silver should regain $17.20 territory, boosted in part by the metals rally.”

Meanwhile, Ralph Preston, principal with Heritage West Financial, said he sees gold moving lower, commenting that he is looking for “another rejection of the $1,300 resistance zone.”

Charles Nedoss, senior market strategist with LaSalle Futures Group, also said lower.

“The equity markets held together,” he said. “The North Korea thing is toning down. The dollar is at a support area….We tried to test the upper end of the range and couldn’t push through.”

Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, looks for a largely unchanged market next week. Fundamentally, Day said that he remains “positive” on gold, citing “turmoil” in White House, geopolitical concerns and a Federal Reserve seemingly “cautious” about future monetary tightening. However, after a recent rally to the top of the range, gold may pull back, although Day also said he does not think it will be “significant or long-lasting. The tide has turned for gold.”

Here is a sampling of thoughts from Kitco Main Street voters on Kitco’s commenting Kitco Chat:

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.