Kitco News Gold Survey: Dollar's Pain To Mean Gold's Gain
(Kitco News) - Traders and analysts who take part in the weekly Kitco News gold survey look for the recent weakness in the U.S. dollar to continue underpinning gold in the next week.
Those who disagree suggest the greenback’s slide may be due for a pause, which in turn could take away some of the shine from gold, at least for now. The yellow metal tends to move inversely to the U.S. currency.
Gold prices on Friday hit their highest level in four months as the euro hit its most muscular level against the U.S. currency in three years.
Seventeen market professionals took part in the Wall Street survey. Twelve, or 71%, called for gold to rise. There were four votes, or 24%, saying gold would fall, while one participant, or 6%, called for a sideways market.
Meanwhile, 663 votes were cast in an online Main Street poll. A total of 404 voters, or 61%, looked for gold to climb in the next week. Another 182, or 27%, said lower, while 77, or 12%, were neutral.
For the trading week now winding down, 55% of Wall Street voters and 62% of Main Street voters were bullish. Around midmorning, Comex February gold was up by 0.5% for the week so far to $1,328.90 an ounce.
For the year 2017, Main Street ended up being right 31 of 50 times for a winning percentage of 62%.Wall Street forecasters collectively were right 30 of 51 times for 59%. (There were two weeks without a Main Street poll and one week without a Wall Street poll).
“We’re heading toward $1,350,” said Daniel Pavilonis, senior commodities broker with RJO Futures. “There’s weakness in the dollar and the [equity and oil] markets are looking a little toppy.”
George Gero, managing director with RBC Wealth Management, also said higher, commenting that there is “enough on every worriers’ plate to keep a bid” in gold.
“I am bullish for next week,” said Kevin Grady, president of Phoenix Futures and Options LLC. “We are seeing big inflows into commodities in general. I think that most of these new longs are passive longs, which tend to stay in the markets longer.”
Sean Lusk, director of commercial hedging with Walsh Trading, also looks for more gains, particularly if gold can gain momentum above the $1,330 resistance level.
“I believe this push still has legs to the upside,” he said. “Nobody wants to be short this thing. The dollar is getting whacked.”
However, others look for the dollar to stabilize, which could prompt a pullback in gold.
“Inflows into gold continued the past week as evidenced by open interest, albeit the pace has slowed from the prior three weeks,” said Ken Morrison, editor of the newsletter Morrison on the Markets. “Gold has met its near-term objective, filling the gap left behind on Sept. 15 at $1,328. With the dollar finding support near the current area, I expect gold to pull back a bit, range trading the next week $1,310-$1,335. I'm modestly bearish from the current level over the next week.”
Charlie Nedoss, senior market strategist with LaSalle Futures Group, also looks for gold to take its foot off of the accelerator, citing an expectation that the U.S dollar will make a corrective bounce after recent weakness.
“Gold is in fire right now and has made impressive gains since the Dec. 12 low, but I think the market is due for some consolidation,” said Ole Hansen, head of commodity strategy at Saxo Bank. “Gold needs to consolidate to rebuild investor interest.”