Wall, Main St. See Price Recovery
(Kitco News) - Wall Street and Main Street both look for gold to continue its recovery next week, based on the Kitco News weekly gold survey.
Comex June gold this week fell as far as $1,302.30 an ounce, its weakest level of the year. Since, however, prices have ticked higher again. One widely anticipated event that occurred this week was a Federal Open Market Committee meeting in which interest rates were left unchanged and policymakers did not signal materially more aggressive future tightening. Meanwhile, an April jobs report that showed less-than-forecast payroll gains of 164,000.
Eighteen market professionals took part in the survey. Twelve respondents, or 67%, called for gold prices to rise over the next week. Another four voters, or 22%, looked for gold to fall, while two, or 11%, called for a sideways market.
Meanwhile, 809 voters responded in an online Main Street survey. A total of 557 respondents, or 69%, predicted that gold prices would be higher in a week. Another 183 voters, or 23%, said gold will fall, while 69, or 9%, see a sideways market.
For the trading week now winding down, 52% of Wall Street voters called for gold to fall, while 58% of Main Street respondents were bullish. As of 11:02 a.m. EDT, Comex June gold was down 0.9% for the week so far to $1,311.80 an ounce.
The smaller-than-forecast rise in April nonfarm payrolls should bode well for gold, says Phil Flynn, senior market analyst with Price Futures Group. “Even though the overall jobless rate went down [to 3.9%], the headline weakness should allay fears the Federal Reserve will be more aggressive on interest rates in the future,” Flynn said.
Further, he added, geopolitical worries are likely to impact markets, particularly whether the U.S. backs out of the nuclear accord with Iran.
George Gero, managing director with RBC Wealth Management, looks for gold to rise, with a potential trade war once again impacting markets. “We’re past the major worries we had with the Fed and jobs report,” Gero said.
Jim Wyckoff, senior technical analyst with Kitco, looks for gold to trade higher since “it appears strong support at $1,300 is holding.”
Charlie Nedoss, senior market strategist with LaSalle Futures Group, figures gold can break above chart resistance around $1,315 next week, if it doesn’t do so before Friday’s trading is over.
“I still think the dollar is toppy,” he said. “Some of the trade talks [between the U.S. and China] weren’t that productive.”
Meanwhile, Kevin Grady, president of Phoenix Futures and Options LLC, is one of the respondents who are bearish, citing gold’s break this week to a new low for the year and also the fact that prices remain just under the 200-day moving average. Expectations for higher U.S. interest rates will keep the market in check, he said. Grady also pointed to recent peaceful rhetoric on the Korean Peninsula, which takes away some safe-haven demand.
“We’re going to see some new shorts [bearish positions] coming into the market,” Grady predicted.
Richard Baker, editor of the Eureka Miner Report, looks for gold to test the bottom end of its trading range.
“Barring a political/geopolitical shock, it is unlikely that the yellow metal will sustain rally against a rising U.S. dollar, which made a new high for the year after the weaker-than-expected nonfarm payroll report this morning,” he said.
Baker later added: “On a positive, it appears the march of higher U.S. interest and inflation rates has stalled given comments by the Federal Reserve on inflation and an economy that added fewer jobs than expected. Rising U.S. deficits will establish a floor for gold prices, and it is likely that prices will stay in a range above $1,300 per ounce.”
Colin Cieszynski, chief market strategist at SIA Wealth Management, is neutral unless gold breaks out of its trading range.
“I remain neutral on gold for next week as it remains in the $1,300-$1,360 range,” he said. “However, USD [U.S. dollar] is climbing despite soft payrolls, so if gold breaks $1,300 I would turn bearish.”