Kitco News Gold Survey: Wall Street Bearish; Main Street Split
(Kitco News) - Wall Street looks for gold prices to fall some more in the next week, while Main Street is nearly evenly split between bulls and bears, according to the weekly Kitco News gold survey.
Gold tumbled this week as the U.S. dollar rose ahead of an expected Federal Reserve rate hike next week and equities remained strong on tax-cut hopes. Technically oriented selling exacerbated the decline as the market fell through key support around multi-month lows and the 200-day moving average. Some traders and analysts look for bargain hunting to now emerge, enabling the market to stabilize, while others see further technical-chart weakness and dollar gains.
Nineteen market professionals took part in the Wall Street survey. Ten, or 53%, called for gold to decline. There were seven votes or 37%, saying gold would rise, with the remaining two votes, or 11%, for a sideways market.
Meanwhile, 847 votes were cast in an online Main Street poll. A total of 400 voters, or 47%, looked for gold to rise in the next week. Another 393, or 46%, said lower, while 54, or 6%, were neutral.
For the trading week now winding down, 58% of Wall Street voters were bearish, the first time analysts and professional traders forecast a weekly decline in prices since late October. The largest camp of Main Street voters (46%) was bullish. Around 11:03 a.m. EST, as Comex February gold was down by 2.6% for the week so far to $1,249.30 an ounce.
So far in 2017, but not counting the current week, Main Street was right 28 of 46 times for a winning percentage of 61%.Wall Street forecasters collectively were right 27 of 47 times for 57%.
Kevin Grady, president of Phoenix Futures and Options LLC, sees gold remaining under pressure now that it has fallen through its 200-day moving average, even though short covering could occur on Friday. Early next week, “the rallies will be sold,” he said.
“The 200-day average is going to be very important for gold,” he continued, pointing out this held as support for a long time before prices finally fell below this week. “It will be resistance for now.”
Charlie Nedoss, senior market strategist with LaSalle Futures Group, sees a possible downside test of $1,240 an ounce.
“The charts look pretty sloppy,” he said. “The dollar looks strong.”
Richard Baker, editor of the Eureka Miner Report, also sees more weakness after gold fell to its lowest levels since mid-year. He commented that softer prices reflect a move to "risk-on" assets, aided at the end of the week by a better-than-expected U.S. jobs report.
“With global equity markets booming again, the value loss to the benchmark S&P 500 scored a new low after the Labor Department numbers for November,” Baker said. “There will likely be some skirmishes around the key $1,250 level next week, but the outlook is not encouraging; a retest of this morning's $1,244 low followed by further descent towards $1,225 territory is possible as 2017 comes to a close.”
Peter Hug, global trading director with Kitco Metals, said he sees a possible softening of gold prices going into the Fed meeting, but then a rebound. Thus, from current prices, he is among those who look for gold to be higher by the end of next week.
So does George Gero, managing director with RBC Wealth Management.
“I see an improvement,” Gero said. “We have priced in all of the negatives. We could see bargain hunting at these low levels.”
Sean Lusk, director of commercial hedging Walsh Trading, also looks for a bounce, chalking up some of the recent weakness to profit-taking as the dollar strengthened.
“These might be good buying opportunities down here in gold and silver,” he said.