Wall St. Bullish, Main St. Mixed On Gold Prices
(Kitco News) - Wall Street remains bullish but Main Street is mixed on the direction of gold prices in the next week, based on the Kitco News weekly survey.
Gold tumbled to its lowest level in six months this week largely due to strength in the U.S. dollar. In doing so, the metal was unable to draw a safe-haven bid despite weakness in equity markets as worries about a global trade war intensified.
Seventeen market professionals took part in the survey. There were 10 votes, or 59%, calling for gold prices to rise. There were five votes, or 29%, calling for gold to fall, while two voters, or 12%, look for a sideways market.
Meanwhile, 2,276 voters responded in an online Main Street survey. A total of 915 respondents, or 40%, predicted that gold prices would be lower in a week. Another 796 voters, or 35%, said gold will rise, while 565, or 25%, see a sideways market.
For the trading week now winding down, 63% of both Wall Street and Main Street were bullish. As of 10:44 a.m. EDT, Comex August gold was down $6.20 for the week so far to $1,272.30 an ounce.
“Although it went against me last week, I am bullish on gold for next week,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
“Technically gold looks ready for a bounce, RSI [Relative Strength Index] is oversold and turning up, Thursday was a hammer candle and a bump up Friday would complete a Morning Star pattern,” he said. “On the flip side, USD [the U.S. dollar] is looking tired with a negative RSI divergence emerging. With all of the central-bank news now out and trade war risks baked in, I think both gold and USD are due for a correction.”
Ken Morrison, editor of the newsletter Morrison on the Markets, also sees a bounce.
“Sentiment on gold got to its most bearish level since December 2016 Thursday but the recovery off the intra-day low combined with the modest turn lower in the dollar is encouraging for gold,” Morrison said. “I expect the market can rally to its first resistance at $1,288 but has the potential to approach $1,305, the downtrend line of resistance.”
Daniel Pavilonis, senior commodities broker with RJO Futures, is also looking for a recovery.
“The dollar is going to weaken,” he predicted. “It should be supportive for the metals…It’s more like a mean reversion. I don’t think we’ll see a substantial move to the upside.”
Sean Lusk, director of commercial hedging Walsh Trading, figures some buying will emerge ahead of the end of the month and quarter. “There is going to be some bargain hunting down here,” Lusk said.
Meanwhile, Jim Wyckoff, Kitco senior technical analysts, is among those who see gold lower in the next week. “Charts remain bearish,” he said.
Ralph Preston, principal with Heritage West Financial, also sees potential for more weakness since gold failed to break above resistance some time ago.
“Gold prices have been unable to close above $1,345-$1,365 resistance zone on a quarterly/monthly basis,” Preston said. “We would need such a close to hope for a sustained rally.”