Wall St. Bullish, Main St. Bearish On Gold Prices For Next Week
(Kitco News) - Wall Street is retaining a bullish tilt on gold prices for the short term, while Main Street is bearish, according to the weekly Kitco News gold survey.
The views of traders and analysts who take part in the Wall Street survey tended to reflect their opinions on what will happen to the U.S. dollar. Those who see the dollar losing some of its recent upward momentum were bullish on gold, and vice-versa. The greenback has been bolstered lately largely on the back of hawkish commentary from Federal Reserve officials, who once again have financial markets factoring in another rate hike in December.
Fifteen market professionals took part in the Wall Street survey. Eight participants, or 53%, look for gold to be higher next week. Six, or 40%, called for lower, while one, or 7%, sees sideways prices ahead.
Meanwhile, 787 votes were cast in an online Main Street poll, with 453, or 58%, predicting gold will fall in the week ahead. Another 250, or 32%, were bullish. The neutral votes totaled 84, or 11%.
For the trading week now winding down, the largest bloc of Wall Street respondents (50%) and Main Street voters (45%) were bullish. As of 11:15 a.m. EDT, Comex December gold was down by 0.8% for the week so far to $1,286.90 an ounce.
So far in 2017, but not counting the current week, Wall Street forecasters collectively were right 23 of 37 times for a winning percentage of 62%. Main Street was right 23 of 36 times for 64%.
Sean Lusk, director of commercial hedging with Walsh Trading, looks for gold to bounce as some of the recent selling pressure due to profit-taking runs its course, with the market perhaps now “oversold” in the near term on a technical-chart basis.
“We’ve seen enough attrition from the highs in gold and silver,” he said. “It’s been a pretty good chop to the downside….The dollar has made its move up. It’s going to struggle to achieve further gains.”
Phil Flynn, senior market analyst with at Price Futures Group, looks for gold to rise due to ideas that the U.S. dollar will give up some of its newfound strength, the Federal Reserve may end up not being as hawkish as perceived due to the potential for hurricanes in the southern U.S. to slow economic growth, plus continued geopolitical risks.
“The move on the dollar might have been a little too much, too fast on the Fed communications,” Flynn said.
Meanwhile, Charlie Nedoss, senior market strategist with LaSalle Futures Group, is among those looking for gold to remain on the defensive.
“I think the strength in the dollar continues,” he said. “Barring a big equity sell-off, I think they continue to put the hurt on gold….If you look, there is negative crossover [on a gold chart]. We had it on the 10- and 20-[day moving averages]. Now we have a negative crossover on the 10- and the 50-[day averages]. To rekindle any kind of bullish forces here, I think you have to see some kind of close above $1,300 next week.”
Ralph Preston, principal with Heritage West Financial, also sees further gold weakness, citing the recent trend of a stronger dollar hurting the metal after hawkishly construed comments about monetary policy this month from Fed Chair Janet Yellen. “Technically, we’re staying capped under $1,363 on a quarterly basis,” Preston added.
Afshin Nabavi, head of trading at trading house MKS (Switzerland) SA, looks for gold to remain in a trading range, pointing out that participants in the key gold-buying nation of China will be sidelined by a week-long holiday next week.
Here is a sampling of thoughts from Kitco Main Street voters on Kitco’s commenting Kitco Chat: