Wall St., Main St. See Higher Gold Prices
Editor's Note: Correcting fourth paragraph to reflect that 59% of Wall Street voters were bearish in Sept. 28 survey. Also, updating same graph with gold prices at end of last week.
Sixteen market professionals took part in the Wall Street survey. Nine respondents, or 56%, predicted higher prices by next Friday. There were two votes, or 13%, calling for lower prices, while five respondents, or 31%, were neutral or looked for a sideways market.
Meanwhile, 593 people responded to an online Main Street poll. A total of 302 respondents, or 51%, called for gold to rise. Another 196, or 33%, predicted gold would fall. The remaining 95 voters, or 16%, see a sideways market.
For Oct. 1-5 trading week, 59% of Wall Street voters were bearish, while Main Street was split with 42% in each of the bearish and bullish camps. Comex December gold finished the week down 0.8% to $1,205.60 an ounce.
“Gold has turned the corner and it will likely move up, albeit unevenly, in weeks ahead,” said Adrian Day, chairman and chief executive officer of Adrian Day Asset Management.
Sean Lusk, director of commercial hedging with Walsh Trading, is also bullish, citing potential for short covering with managed-money accounts holding a large bearish position. He sees limited upside for the U.S. dollar with markets already factoring in further monetary tightening.
“You found some bottoms technically under $1,200,” Lusk said. “It just seems like the market wants to work higher….I think you’ll see some flows into the metal in the fourth quarter.”
Daniel Pavilonis, senior commodities broker with RJO Futures, also figures gold can move higher since September nonfarm payrolls were below forecasts and wage growth was in line with expectations. September jobs gains were a lower-than-forecast 134,000; however, July and August payrolls were revised upward by a combined 87,000.
“It may give a little weakness to the U.S. dollar and rates [Treasury yields] will push back a little bit,” Pavilonis said. “It might give gold and silver a chance to move higher.”
Richard Baker, editor of the Eureka Miner Report, said Comex gold showed resilience trading above $1,200 an ounce despite a “solid” September jobs report, rising 10-year Treasury yields and 10-year real interest rates creeping higher.
“At a minimum, I believe the near-term low is in for gold and the August-September double-bottom ($1,167.10 and $1,184.30, 12/18 contract) signals the yellow metal should trend higher from here,” Baker said.
“Why the optimism? Although normally a headwind for gold, yields marching higher will become an increasing drag on domestic equities, which remain near all-time highs. The stranglehold of rising stocks and falling gold prices may finally be near a turning point allied by gradually accelerating inflation in the U.S.”
Charlie Nedoss, senior market strategist with LaSalle Futures Group, also looks for the metal to rise, particularly if December gold closes above the 10-day moving average near $1,200 and the 20-day around $1,202.
“I like the fact that we are starting to build a base back above $1,200,” Nedoss said. “It looks like we’re building a bull flag for the week….I’m looking for higher. You have crude above $70 [a barrel], pressuring new highs.”
Meanwhile, Kevin Grady, president of Phoenix Futures and Options LLC, is bearish.
“We are seeing higher rates globally, and I believe that this will keep pressure on the flat price,” Grady said. “Every recent rally has been met by sellers. The shorts are in control still and I think only a settlement above $1,225 will initiate short covering.”
Jim Wyckoff, senior technical analyst with Kitco, described gold as steady and “trapped in a trading range.”