Kitco News Gold Survey: Respondents Mixed On Prices During FOMC Week
(Kitco News) - There is little conviction in the gold market as Wall Street and Main Street are split on the near-term direction of prices, based on the weekly Kitco News gold survey.
This comes after both leaned bearish in the last survey and are right so far in the current week. Next week brings a highly anticipated news event - a meeting of the U.S. Federal Open Market Committee, which is widely expected to hike interest rates by another 25 basis points.
Nineteen market professionals took part in the weekly Kitco News Wall Street survey. There were eight votes, or 42%, calling for gold prices to fall over the next week. Another seven voters, or 37%, look for gold to rise, while four, or 21%, call for a sideways market or are neutral.
Meanwhile, a smaller-than-normal 460 voters took part in an online Main Street poll. A total of 202 voters, or 44%, said bullish. Another 187 voters, or 41%, said bearish, while 71, or 15%, were neutral.
For the trading week now winding down, 65% of Wall Street voters and 47% of Main Street voters were bearish â€“ the largest voting blocs in each poll. As of 11:07 a.m. EDT, Comex April gold was down 1.1% for the week so far to $1,310 an ounce.
A number of traders and analysts noted that gold has been choppy and in a sideways range lately.
“We may see a continuation of this consolidation for another week or so, though fundamentally I remain bullish,” said Adrian Day, chairman and chief executive officer of Adrian Day Asset Management. “The turmoil in Washington, geopolitical risk; and cautious interest rate policy are all positive for gold.”
Afshin Nabavi, head of trading at trading house MKS (Switzerland) SA, commented that he looks for an uptick in a market that has been range-bound lately. “There seems to be some buying on the dips,” he said.
Daniel Pavilonis, senior commodities broker with RJO Futures, also said higher. “It hit support. It’s due for a little bit of a pop,” he said.
Sean Lusk, director of commercial hedging with Walsh Trading, looks for gold to benefit from geopolitical concerns as well as a view that new Federal Reserve Chair Jerome Powell will not be overly aggressive hiking interest rates.
“I think they put this guy in for a reason â€“ not to be seen as a total hawk,” Lusk said. He also commented: “Should there be a dip [in gold prices], it will be bought anyway.”
Meanwhile, Mark Leibovit, editor of the VR Gold Letter, described himself as bearish. “Waiting for renewed bottom confirmation,” he added.
Kevin Grady also said he is bearish for next week.
“I think that we are going to test the 100-day moving average, which is $1,308.20,” Grady said. “We have added almost 50,000 lots of new open interest this week. I believe a lot of the new longs came into the market because of turmoil in the White House, coupled with fears of a trade war. We have not seen the flight-to-quality rally in gold that a lot of the new longs expected. I believe a test of the 100 DMA and 200 DMA is imminent.”
Ken Morrison, editor of the newsletter Morrison on the Markets, also looks for lower prices, although he also commented that the “next move is difficult to read” with gold and the dollar index in sideways consolidation patterns.
“I am interested by the rising open interest, up 7% in a week, during this sideways price action,” Morrison said. “It indicates strong opinions are on both sides of the bull-bear argument. That gold has not been able to mount a better rally given the political and market uncertainty leaves me with a slightly negative bias. Gold likely tests $1,300 next week.”
Robin Bhar, metals analyst at Societe Generale, looks for the metal to fall ahead of the Federal Reserve meeting, then recover, ultimately finishing next week roughly where it is now. Down-then-up movement has been a pattern for some time now around meetings in which the Fed has hiked interest rates, a number of analysts have pointed out.
“I think we will have a dip,” Bhar said. “Then we will have a rally after the Fed increases [interest rates].”