Wall St. Mixed On Near-Term Gold Prices; Main St. Bullish
Eighteen market professionals took part in the Wall Street survey. There were six votes each, or 33%, for all three categories – higher, lower and sideways/neutral.
Meanwhile, 440 respondents took part in an online Main Street poll. A total of 255 voters, or 58%, called for gold to rise. Another 94, or 21%, predicted gold would fall. The remaining 91 voters, also 21%, see a sideways market.
Last week, 73% of Wall Street and 57% of Main Street were bullish on gold. As of a.m. EST, Comex February gold futures trading 0.5% lower for the week so far to $1,283.30 an ounce.
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, acknowledged that there are factors that could hurt gold but nevertheless looks for prices to rise since the fundamental backdrop is overall favorable.
“Gold is, no doubt, at this point vulnerable to any good news, on the U.S. government shutdown or China trade,” Day said. “It may also have to tackle the psychologically important $1,300 level more than once before breaking through. And lastly, momentum has slowed over the past 10 days or so as stock markets have recovered.
“But the fundamentals are bullish and the risks seem to the upside with little progress on the shutdown, or Brexit, China or Italy.”
Richard Baker, editor of the Eureka Miner Report, also looks for gold to climb, looking for $1,380 sometime in the first half of 2019.
“It is likely gold will push up next week against a backdrop of a prolonged U.S. government shutdown and continued turmoil in Washington,” he said. “Optimism is up that the U.S.-China trade negotiations are back on track for a deal this spring, but this could flip-flop in the coming weeks. I expect U.S. dollar strength will falter and resume decline towards its 200-day average.”
Bill Baruch, president of Blue Line Futures, is among those looking for a retreat in gold prices in the near term.
“I am welcoming the lower prices. This is a very healthy correction,” Baruch said.
Independent technical analyst Darin Newsom sees prices falling in the next week, commenting that a weekly chart for the most-active February contract shows a potential secondary or intermediate-term top.
“Weekly Stochastics are in position to establish a confirming bearish crossover above the overbought level of 80%, with the initial occurring the week of Dec 31,” Newsom said. “The contract continues to consolidate within the range from the week of Dec. 31, between $1,300.40 and $1,278.10. Confirmation of an expected secondary downtrend would be a bearish breakout below $1,278.10.”
Ole Hansen, head of commodity strategy at Saxo Bank, said that he is bearish on gold in the short term but sees long-term potential for the yellow metal.
“The reasons for holding gold haven’t changed,” he said. “But gold is doing what it’s supposed to as a hedge; it's taking a breather as other asset classes rally.”
Nicholas Frappell, global general manager with ABC Bullion, looks for gold to remain in its recent range with a steady tone.
“There are signs of gamma hedging resulting from options interest around the $1,300 strike, which should act to restrain gold’s movement,” Frappell said.
Colin Cieszynski, chief market strategist at SIA Wealth Management, is neutral.
“Gold has started to run into resistance near $1,300 and appears to be leveling off between there and $1,280 with more support near $1,265,” he said. “In the coming week, I think gold may continue to digest its recent rally and work off an overbought RSI [Relative Strength Index] that had developed. Looking out a bit farther, the VIX [fear index] continues to drop back and with fear easing, gold may lose some of its tailwinds, but this could be offset by the U.S. dollar leveling off.”