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Wall St, Main St. See Gold Rising Amid Expectations For Rate Cut

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(Kitco News) - Wall Street and Main Street look for gold to maintain its upward momentum next week, based on the weekly Kitco News gold survey.

Traders and analysts cited growing expectations that the next move by the Federal Reserve will be a rate cut, especially after a softer-than-forecasted U.S. jobs report on Friday. Nonfarm payrolls rose by 75,000 in May when consensus expectations had been for around 175,000 to 185,000.

Sixteen market professionals took part in the Wall Street survey. A total of 12 voters, or 75%, called for gold to rise. For the second straight week, no voters said lower, while four voters, or 25%, predicted a sideways market or were neutral.

Meanwhile, 607 respondents took part in an online Main Street poll, the most so far this year. A total of 398 voters, or 66%, called for gold to rise. Another 135, or 22%, predicted gold would fall. The remaining 74 voters, or 12%, saw a sideways market.

Kitco Gold Survey

Wall Street

Bullish
Bearish
Neutral

VS

Main Street

Bullish
Bearish
Neutral

In the last survey, Main Street and Wall Street were both bullish. As of 11 a.m. EDT, they were right, with Comex August gold futures trading up 2.9% for the week so far at $1,350.80 an ounce.

“A weaker-than-expected jobs report adds ammunition for a rate cut to come sooner rather than later,” said Bob Haberkorn, senior commodities broker with RJO Futures.

Speaking shortly after the data, he noted that the Fed fund futures were factoring in a 37% chance for a rate hike in June and a 73% for September.

“Gold should be on track for another strong week,” said Phil Flynn, senior market analyst with at Price Futures Group. “The Federal Reserve’s admission that U.S. rates [are] more than likely headed lower means that gold is going to go up. Strong central bank [demand] and an uptick in physical buying by consumers will also add support. Don’t fight the Fed.”

George Gero, managing director with RBC Wealth Management, agreed, adding that a “global economic pullback and weak jobs could help Fed lower [rates] and that could lower the dollar somewhat.”

Kevin Grady, president of Phoenix Futures and Options LLC, offered a similar sentiment, but added that August gold needs to finish above the February high of $1,361.50 to generate upside momentum. The expectation for a Fed rate cut in September will help provide a base under gold, he added.

“I’m friendly to the market,” Grady said. “The market has some legs to it with everything going on, especially the data.”

Andy Hecht, leading precious metals contributor to Seeking Alpha, also said he is bullish.

“While odds favor lower because gold has failed near this level since 2016,  the chances of a break to the upside are rising,” he said.

Mark Leibovit, publisher of VR Metals/Resource Letter, said gold appears to have posted a seasonal low. “Not clear sailing but we should work our way back to $1,370 between now and year-end,” he said.

Ole Hansen, head of commodity strategy at Saxo Bank, said that he is neutral on gold in the near term and the $1,350 level could attract some sellers to the marketplace. He added that gold investors might be getting a little bit ahead of themselves as markets aggressively price in looser U.S. monetary policy through the rest of the year.

“After the rally we have seen, I think the market is need of consolidation,” Hansen said. “But I wouldn’t want to be bearish on this market.”

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