Wall St., Main St. Think Exactly Alike While Forecasting Higher Gold Prices
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The percentages for voting in both the Wall Street and online Main Street polls were identical, when rounded off to the nearest whole number.
The metal early this week hit a one-month high on safe-haven buying when equities tumbled. However, gold gave up those gains later in the week as traders exited fresh bullish trades and stocks recovered.
Eighteen market professionals took part in the Wall Street survey. A total of nine voters, or 50%, called for gold to rise. Another six, or 33%, predicted gold would fall. The remaining three voters, or 17%, saw a sideways market or else were neutral.
Meanwhile, 332 respondents took part in an online Main Street poll. A total of 167 voters, or 50%, called for gold to rise. Another 110, or 33%, predicted gold would fall. The remaining 55 voters, or 17%, saw a sideways market.
In the last survey, Main Street was bullish while Wall Street was split between neutral and bullish. As of 11:05 a.m. EDT, Comex June gold futures were trading down 0.8% for the week so far at $1,276.90 an ounce.
Afshin Nabavi, head of trading with MKS, said he is "cautiously bullish" on gold's fortunes for next week.
"Despite the overnight news of China pulling back on trade talks with the U.S., gold cannot seem to find much in the way of support," Nabavi said. "Broadly speaking, we seem to be in a range between $1,267 and $1,309. Personally speaking, I cannot be short [bearish] with all the geopolitical tension in the Middle East and trade talks."
Alex Turro, market strategist with RJO Futures, figures gold could dip some more in the short term but still favors the long side of the market, looking for an eventual upside breakout. "I see the dollar in a topping process," he said.
Jasper Lawler, head of research at London Capital Group, said that he is slightly positive on gold since it has held up really well in the face of a recovery in equity markets and relative strength in the U.S. dollar. Although gold was unable to hold critical physiological support at $1,300, the yellow metal was showing some resilience by holding above support around $1,280, as of when Lawler spoke, before dipping below.
"If the wobble we have seen in equity markets is more sustainable in coming weeks, then gold looks a lot better," Lawler said
Adam Button, managing director of ForexLive, also said higher.
"I expect concerns about a U.S.-China trade war to intensify and markets to begin to price in slower global growth," Button said.
Meanwhile, Kevin Grady, president of Phoenix Futures and Options LLC, said he is "slightly bearish" for gold next week.
"As I've been saying the past few weeks, I would be a seller of rallies anywhere near the $1,305 resistance level," Grady said. "Our high this week was $1,304.20. There were a tremendous number of longs who entered the market in front of that number.
"I think that we will see some liquidation with a settlement under $1,282. There is a lot of geopolitical news that should give underlying support to the market so I am not looking for a total washout at these levels, but I do think we could test $1,275."
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, also looks for near-term price weakness.
"A stock-market recovery will hurt gold, while any kind of movement towards a trade deal with China will boost the dollar and also hurt gold," Day said. "So in the near term, there is a possibility of further declines. However, we would not be selling.
"The stock market can turn around as quickly as it bounced off the bottom, while positive movement on the dispute with China is by no means certain. The monetary background remains positive for gold."
Sean Lusk, director of commercial hedging with Walsh Trading, also figures gold could slip some more in the near term, commenting that the market "rejected the recent rally." However, he adds, this could change if the stock market sells off, which could mean renewed safe-haven buying of the precious metal.
However, in the meantime, Lusk said, "The rising dollar is playing havoc with the metal. Silver is posting new lows here."
Independent technical analyst Darin Newsom looks for another leg lower before gold rises again.
"This week's move [in the] June contract looks to be Wave 2 of a secondary (intermediate-term) five-wave uptrend," Newsom said. "This should result in a retest of support near $1,270.50, while pulling weekly Stochastics below the oversold level of 20%, setting the stage for a bullish crossover the following week."
Fawad Razaqzada, technical analyst at City Index, said he is bearish on gold as the market looks very weak after seeing another failed attempt to push past $1,300.
Jim Wyckoff cast one of the steady-neutral votes, commenting: "Bulls faded this week to put them back on a level overall near-term technical playing field with the bears." Colin Cieszynski, chief market strategist at SIA Wealth Management, also does not look for any kind of big move.
"Gold's inability to break through $1,300 in a week where the VIX took off and political uncertainty ramped up is very disappointing," Cieszynski said. "At the same time, gold appears to have established support near $1,265 so it could bounce around between these levels for a while."