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Kitco News Gold Survey: Wall Street Flips To Bearish Outlook

Kitco News

(Kitco News) - Wall Street has turned bearish on gold for the first time since the end of October, while the largest bloc of Main Street voters remains bullish, according to the weekly Kitco News gold survey.

Kitco Gold Survey

Wall Street

Bullish
Bearish
Neutral

VS

Main Street

Bullish
Bearish
Neutral

A total of 19 market professionals took part in the Wall Street survey. Eleven, or 58%, called for gold to fall. There were four votes each, or 21%, calling for gold to either rise or trade mostly sideways.

Meanwhile, 619 votes were cast in an online Main Street poll. A total of 287 voters, or 46%, looked for gold to rise in the next week. Another 238, or 38%, said lower, while 94, or 15%, were neutral.

For the trading week now winding down, 68% of Wall Street and 57% of Main Street voters were bullish. Around 11  a.m. EST, as Comex February gold was down by 1.2 % for the week so far to $1,276.50 an ounce.

So far in 2017, but not counting the current week, Wall Street forecasters collectively were right 27 of 46 times for a winning percentage of 59%. Main Street was right 28 of 45 times for 62%.

Bob Haberkorn, senior commodities broker with RJO Futures, expects the yellow metal to remain under pressure although he also said “I don’t expect the bottom to fall out.” Like others, he figures the approach of a mid-December meeting of the Federal Open Market Committee, which is expected to hike U.S. interest rates by another 25 basis points, will take a toll on gold. Additionally, Haberkorn said, any progress on bills for U.S. tax cuts is likely to boost equities and therefore take away demand from gold.

“I have been telling clients we are less than two weeks out from a Fed meeting,” Haberkorn said. “Until that, I don’t see a reason for gold to rally, unless there is a geopolitical event.”

Robin Bhar, metals analyst at Societe Generale, expressed a similar sentiment. “The imminent rise in interest rates by the Fed is going to maintain downside pressure on gold,” he said.

Ken Morrison, editor of the newsletter Morrison on the Markets, suggested gold potentially could break below support at $1,270 an ounce.

“The failed attempt to extend the rally beyond resistance at $1,300 was a catalyst for some long liquidation,” he said. “In the past 10 days, open interest in gold declined over 60,000 contracts (13%) as price retreated over $20, indicating the dominant money flow has been longs paring back positions in part due to the exodus of the December contract. With gold's open interest now back to mid-August levels and the dollar seemingly trendless, one might conclude the active money is going to the sidelines through year-end.

“Gold has held support at $1,270 three times in the past two months and my rule of thumb is the more frequently a market retests support, the more likely it is to fail on the next try. The week ahead likely sees gold break $1,270.”

Richard Baker, editor of the Eureka Miner Report, also said lower, commenting that the metal is sensitive to the fate of U.S. tax-reform legislation.

“Although the Senate vote has been delayed until possibly today, it will likely pass in some form; the same is true for the reconciliation phase,” Baker said. “This will be net bearish for gold given the thesis that lower taxes will spur economic growth, strengthen the U.S. dollar and establish an environment for higher interest rates. This week's better-than-expected U.S. GDP print of 3.3% reinforced the notion of a strengthening economy. A key interest rate to watch is the 10-year Treasury yield; [a] sustained rise above 2.4% is bearish.”

Meanwhile, Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, is among those who see gold bouncing. “Gold is now at lower end of recent range, so any positive news -- positive for gold -- could see a rebound,” he said.

Mark Leibovit, editor of the VR Gold Letter, said gold remains in a “seasonally positive period. Also, it appears Bitcoin may have temporarily lost its luster.”

Afshin Nabavi, head of trading at trading house MKS (Switzerland) SA, is among those who look for gold to remain sideways, noting the range for some time now has been roughly $1,265 to $1,295 an ounce. “There’s no news that could justify it going lower or higher,” he said.

A Utah-based Kitco reader also looks for gold weakness, commenting: “Gold has now broken through the lower uptrend line at about $1,282 on the downside. It will now continue to head lower until it completes the C-wave (second leg down), which will put it at about $1,209 or lower before the secular bull market in gold resumes.”

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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