Wall St., Main St. Both Split On Gold Prices
Seventeen market professionals took part in the Wall Street survey. Seven respondents, or 41%, called for higher prices, while six, or 35%, said lower. Four respondents, or 25%, predicted a sideways market.
Meanwhile, 617 voters responded in an online Main Street survey. A total of 261 respondents, or 42%, predicted that gold prices will be lower in a week. Another 252 voters, or 41%, said gold will rise, while 104, or 17%, see a sideways market.
For the trading week now winding down, 50% of Wall Street voters and 51% of Main Street respondents were bearish. As of 11:09 a.m. EDT, Comex December gold was down 0.6% for the week so far to $1,233.20 an ounce.
Ken Morrison, editor of the newsletter Morrison on the Markets, looks for gold to attempt to reclaim the $1,240 area. Despite headwinds such as lingering U.S. dollar strength and expectations for more U.S. rate hikes, gold has “held its ground” above $1,200 an ounce so far, he pointed out.
“With sentiment near extreme bearishness and managed-money funds near or at a record net short, I expect December gold will manage to trade to $1,240 again within the week,” Morrison concluded.
George Gero, managing director with RBC Wealth Management, said if gold can hold nearby chart support until Aug. 1 when the rollover out of the August futures should be over, “we could see a rally and shorts covering.” Thus, he looks for a “small up” next week.
Sean Lusk, director of commercial hedging Walsh Trading, looks for gold to bounce, with some buying starting to kick in ahead of the historically strong autumn season, as well as potential bargain hunting after gold’s recent weakness. He also pointed out that data this week shows that Chinese imports from Hong Kong rose sharply last month.
“I just think prices are too low,” Lusk said. “There are still worries in the markets. Things aren’t as rosy as they seem.”
A Kitco reader from Utah named Lynn is also bullish.
“Gold should head higher next week, because it has finished seven waves down, according to The Economic Time Equation, and [held] the Fibonacci level of $1,209 or close enough to it, which is a 50% retracement of the move from the bottom to the top of the previous bull run,” Lynn said.
Kevin Grady, president of Phoenix Futures and Options, remains bearish.
“Although we are seeing some ETF buying, I believe gold has not found its floor,” Grady said. “I believe a test of the $1,200 support level is imminent.”
Charlie Nedoss, senior market strategist with LaSalle Futures Group, said he looks for gold to test the lower end of its recent range while the U.S. dollar tests the upper end. Jim Wyckoff, senior technical analyst for Kitco, sees gold sideways to lower since the technical charts are still bearish.
Richard Baker, editor of the Eureka Miner Report, sees gold weaker, citing gold’s recent fall being in lock step with the Chinese yuan.
“This tight relation between gold and the Chinese currency began with escalating U.S.-China trade tensions in late March; both gold and [the] yuan have plummeted in value since,” Baker said. “Today's yuan above 6.8 USD/CNY is statistically consistent with $1,213 gold bounded by $1,228 above and $1,197 below. A retest of $1,210 is now likely suggesting more pain may be on the way if the correlation holds.”
Ole Hansen, head of commodity strategy at Saxo Bank, said he is neutral on gold next week, commenting that the market is directionless as it is stuck in a channel between $1,210 and $1,240.
“This is not the time of the year to make big decisions on direction,” Hansen said. “Traders are more concerned with getting their kids to the beach.”
Colin Cieszynski, chief market strategist at SIA Wealth Management, also said he is neutral on gold in the near term.
“I am close to being outright bullish on gold, but I will remain a little more cautious because I don’t know if there is one more washout in the marketplace,” he said.