Wall St., Main St. Expect Gold To Keep Shining
Observers suggested Friday’s softer-than-forecast report on U.S. nonfarm payrolls will continue to offer support to the precious metal. The Labor Department reported that 155,000 new nonfarm jobs were created last month, when expectations had been for around 190,000 to 200,000. Still, the jobless rate remained at a 49-year low of 3.7%.
Fourteen market professionals took part in the Wall Street survey. Eight respondents, or 57%, predicted higher prices by next Friday. There were three votes each, or 21%, for lower and sideways/neutral.
Meanwhile, 501 people responded to an online Main Street poll. A total of 319 respondents, or 64%, called for gold to rise. Another 118, or 24%, predicted gold would fall. The remaining 64 voters, or 13%, saw a sideways market.
For the trading week now winding down, 69% of Wall Street and 57% of Main Street was bullish. Just before 11 a.m. EST, Comex February gold was higher for the week, gaining 2% so far to $1,250.70 an ounce.
“I am bullish on gold for next week,” said Colin Cieszynski, chief market strategist at SIA Wealth Management. “With Treasury yields falling and nonfarm payrolls missing, the U.S. has been in retreat and I think this could continue into next week, lifting the lid off gold and enabling it to potentially rally further.”
Phil Flynn, senior market analyst with at Price Futures Group, also looks for prices to rise after the jobs report.
“The weaker-than-expected jobs headline number should conquer to lower rate-hike expectations,” Flynn said. “That should give gold a stronger outlook going forward.”
Jim Wyckoff, senior technical analyst with Kitco, cited an improving chart posture.
“Gold is potentially on the verge of major trend change if we can see a breakout move over $1,250,” said Phillip Streible, senior market strategist with RJO Futures. “The key driver will be the tone of the highly anticipated December FOMC [Federal Open Market Committee] meeting.”
Sean Lusk, director of commercial hedging with Walsh Trading, looks for gold to keep its bid. Should the February futures take out the October high of $1,252, the metal could go back to the $1,265-$1,270 area, he said.
“The managed-money funds have been short for a while,” Lusk said. “They haven’t covered all of them, although they’ve covered some …. There’s more to cover here.
“Gold has a couple of things working for it,” he continued, citing potential for any thawing in the U.S.-China trade war to undercut the U.S. dollar, as well as potentially softener economic growth. “The dollar is going to be the driver in the near term. Let’s keep our eye on that.”
Meanwhile, Richard Baker, editor of the Eureka Miner Report, looks for gold to pull back.
“At the release of a so-so jobs report, Comex gold made a six-week high, barely nudging above the key $1,250 level,” he said. “Does it move higher from here? It is instructive to note that in that same period, the yellow metal has gained about 1% in value relative to the embattled S&P 500 and copper prices are only 1% higher -- seemingly calm waters if we ignore the violent market storms in between.
“This suggests that gold prices are at the top of a range that is unlikely to change until there is more clarity on the turbulent U.S.-China trade relations and the trajectory of U.S. Federal Reserve hikes next year.”
Daniel Pavilonis, senior commodities broker with RJO Futures, looks for chart resistance to emerge around the $1,255 level. Further, he added, if the softer-than-forecast U.S. jobs data gives equities a lift, investors may be less inclined to turn to gold.
“I think it’s going to top out next week and come off again,” Pavilonis said.
Afshin Nabavi, head of trading at trading house MKS (Switzerland) SA, characterized the market as still range-bound. “A break above $1,250 is needed to trigger some fresh interest,” he added.
Kevin Grady, president of Phoenix Futures and Options, said he is neutral for next week.
“I do not see many traders putting on positions with the holidays looming,” he said .”I also think the volatility in the equity markets is causing traders to pause and wait for more clarity.”