Main St., Wall. St. Look For Higher Gold Prices
(Kitco News) - Wall Street and Main Street have both flipped from bearish to bullish short-term forecasts for gold prices, based on the Kitco News weekly survey.
Gold is headed for a small gain in a holiday-thinned week, with Canada Day and the U.S. Fourth of July both occurring in the same week. The metal held up Friday even though U.S. nonfarm payrolls came in slightly stronger than expectations, rising by 213,000 during June.
Sixteen market professionals took part in the survey. There were 11 votes, or 69%, calling for gold prices to rise. There were three votes, or 19%, calling for gold to fall, while two voters, or 12%, look for a sideways market.
Meanwhile, 808 voters responded in an online Main Street survey. A total of 449 respondents, or 56%, predicted that gold prices would be higher in a week. Another 231 voters, or 29%, said gold will fall, while 128, or 16%, see a sideways market.
For the trading week now winding down, the largest blocs of Wall Street (53%) and Main Street (46%) voters were bearish. Around 11 a.m. EDT, Comex August gold was up 0.1% for the week so far to $1,256.20 an ounce.
Charlie Nedoss, senior market strategist with LaSalle Futures Group, sees potential for gold to rise to the 20-day moving average around $1,271 on ideas that the U.S. dollar may have put in a top. He also cited an “outside day” reversal higher for gold on a daily chart Monday.
“The dollar looks toppy to me,” he said, noting this fell below the 20-day average. “The jobs report should have been friendly for the dollar.”
Precious metals tend to move inversely to the U.S. currency.
“I’m looking for a little bounce,” said Ralph Preston, principal with Heritage West Financial. He cited the market’s ability to hold key chart support, including a double-bottom.
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management,
suggested the widening tariff war should support gold, as well as uneasiness with stocks, leading some to take a “hedge position in gold.”
Sean Lusk, director of commercial hedging with Walsh Trading, looks for gold to start trying to regain its footing as long as market does not fall through the recent lows near $1,238, thus avoiding further technical-chart selling.
“If we hold, seasonal buying will start to creep in as we move through July,” Lusk said.
Phil Flynn, senior market analyst with at Price Futures Group, predicted a bounce in gold after recent weakness that he said was largely due to a muscular U.S. dollar amid concerns about a trade war with China. By now, a trade war has already been factored into markets, at least to a certain extent, he continued.
“Now that the shots of the trade war have been fired, the markets will be less concerned,” he said. Further, he looks for physical demand for the metal to pick up and commented that the improving U.S. labor market could raise inflation expectations.
Meanwhile, Kevin Grady, president of Phoenix Futures and Options LLC, sees weakness in gold due to dollar strength and a view that U.S. jobs report for last month was strong enough to support continued monetary tightening by the Federal Reserve. He put support for gold around $1,230 to $1,231.
“Even with the trade wars, we see people running to the U.S. dollar as a safe haven,” Grady said. “That will hurt gold.”
Jim Wyckoff, senior technical analyst with Kitco, said he views the charts as bearish.
Colin Cieszynski, chief market strategist at SIA Wealth Management, described himself as neutral on gold for now.
“To me, it looks stuck in a $1,240 [to] $1,260 maybe $1,265 trading range,” Cieszynski said. “Neither the imposition of tariffs nor stronger U.S. nonfarm payrolls and trade data were able to kick the U.S. dollar and gold into gear. This suggests to me that these forces are offsetting each other, keeping gold stuck in its current trading range.”