Wall St., Main St. Look For Gold To Strengthen
Editor's Note: Get caught up in minutes with our speedy summary of today's must-read news stories and expert opinions that moved the precious metals and financial markets. Sign up here!
(Kitco News) - Wall Street and Main Street both remained bullish in the weekly Kitco News gold survey.
Assuming Friday’s rally continues into the close, gold will have risen in seven of 10 weeks so far in 2019, and survey respondents look for that trend to continue.
“Gold bulls have got control,” said Phil Flynn, senior market analyst with at Price Futures Group.
Fourteen market professionals took part in the Wall Street survey. Nine participants, or 64%, described themselves as bullish for the week ahead. There were four voters, or 29%, who see a sideways market or else are neutral, while one respondent, or 7%, called for prices to decline.
Meanwhile, 484 respondents took part in an online Main Street poll. A total of 270 voters, or 56%, called for gold to rise. Another 135, or 28%, predicted gold would fall. The remaining 79 voters, or 16%, saw a sideways market.
In the last survey, Wall Street and Main Street were both bullish on gold for the current week. As of 11:10 a.m. EDT, Comex April gold futures were trading higher by 0.2% for the week so far at $1,302.50 an ounce.
Daniel Pavilonis, senior commodities broker with RJO Futures, said that while gold has been choppy lately, the uptrend is intact. He pointed out that gold has tended to bounce whenever it falls back to trendline support. The Federal Open Market Committee is not expected to hike interest rates again in the near future, which is supportive for the metal, he explained.
“It looks like yields are backing off on bonds,” Pavilonis said. “I think the dollar will top out. That will give some upside to the metals.”
Afshin Nabavi, head of trading at trading house MKS (Switzerland) SA, said the $1,290 area seems to have built a “nice base” for gold. Barring any unexpected news, he looks for a range of $1,300 to $1,325.
“We have the FOMC [Federal Open Market Committee] this Wednesday,” Nabavi said. “So [the] market will be watching closely but overall feel bullish towards the gold market.”
Richard Baker, editor of the Eureka Miner Report, said that gold “demonstrated buoyancy but not much more” this week. Still, he sees factors in favor of the yellow metal.
“However, a rate environment supportive of higher gold prices is still in play,” Baker said. “The weekly move lower in the 10-year Treasury yields and a slight uptick in inflation expectations over that same period has pushed real rates to a new 2019 low of 0.65% -- this is 8 basis points below a year-over-year comparison and a full 14 bps on a monthly basis.
“Additionally, the Indian rupee has strengthened below 70 USD/INR for seven out of the last eight market days. This makes gold and silver denominated in U.S. dollars cheaper for Indian buyers on a relative basis. These are potentially bullish developments.”
Jasper Lawler, head of research at London Capital Group, described himself as neutral to positive on gold in the near term. He said that gold could consolidate in the current range, but he doesn’t see why gold would go below $1,280 an ounce.
“Overall there is still strong appetite for gold,” Lawler said.
Adam Button, managing director of ForexLive, looks for gold to keep hovering not far from its current levels.
“Volatility has been the story in gold in the past two weeks, and that’s a welcome change from most of 2018,” Button said. “The larger moves will stoke retail interest over time and act as a tailwind. In the week ahead, look for more consolidation around $1,300.”
Kevin Grady, president of Phoenix Futures and Options LLC, said he remained neutral, commenting that prices have bounced from around $1,290, but nevertheless remain stuck in a range.
“There is no real news out there moving everything,” Grady said. “Even the Dow is pretty flat.”
Ole Hansen, head of commodity strategy at Saxo Bank, also said he is neutral on gold in the near term. He commented that the Fed’s neutral stance will continue to support equity markets, which will weigh on gold prices. He added that Thursday’s 1% sell-off shows that the gold market lacks conviction, as investors see little reason to hold an insurance policy.
“I just don’t see any signs that will spark new upside to gold,” Hansen said. “However, there are still a lot of reasons to hold gold, so I don’t see much downside either.”