Wall St. Leans Neutral/Sideways On Gold Prices, Main St. Bullish
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(Kitco News) - Wall Street traders and analysts are undecided or else look for gold prices to be sideways next week, while Main Street remained bullish, according to the weekly Kitco News gold survey.
The largest block of Wall Street voters were in the neutral/sideways camp, while the rest were nearly evenly split between bulls and bears. This was the first time Wall Street was not bullish since May 10, when the professionals were also neutral.
Sixteen market professionals took part in the Wall Street survey. A total of seven voters, or 44%, called for gold to be either sideways or are neutral. There were five votes, or 31%, for higher, while four respondents, or 25%, look for the metal to fall.
Meanwhile, a one-year high of 961 respondents took part in an online Main Street poll. A total of 653 voters, or 67%, called for gold to rise. Another 175, or 18%, predicted gold would fall. The remaining 133 voters, or 14%, saw a sideways market.
In the last survey, Main Street and Wall Street voters alike were bullish. Just before 11 a.m. EDT, Comex August gold futures were trading $8.40 higher for the week so far at $1,408.50 an ounce.
Wall Street has a 14-12 winning record for the year, meaning respondents have been right 54% of the time. Main Street is 13-13 for 50%.
Gold prices rebounded this week, after Federal Reserve Chair Jerome Powell remained dovish during his congressional testimony, despite a 224,000 increase in nonfarm payrolls reported a week ago.
“I expect higher next week on a continuation and follow-through of this past week after the Fed talk,” said Bob Haberkorn, senior commodities broker with RJO Futures. The Fed is expected to cut rates, which benefits the yellow metal, he continued.
“Gold has that feel where traders and investors are not waiting to buy dips,” he continued. “They’re jumping into it. When you get into that mode, you can go higher.”
George Gero, managing director with RBC Wealth Management, said he looks for gold to be “up moderately” next week, now that the market worries about any Federal Reserve hawkishness have been put to rest.
“After Powell’s testimony, it’s clear that gold will benefit from a more dovish Fed,” said Phil Flynn, senior market analyst with at Price Futures Group. “On top of that, geopolitical tensions with Iran and the U.S.-China trade war worries will give gold bulls an edge.”
Jim Wyckoff, senior technical analyst with Kitco, sees gold steady to higher since the picture on the charts remains bullish.
Meanwhile, Kevin Grady, president of Phoenix Futures and Options LLC,
said he is bearish for next week. “I am looking for a retracement to the July 1st low of $1,384.70,” he said.
Ole Hansen, head of commodity strategy at Saxo Bank, said that is he slightly bearish on gold in the near term as the summer doldrums could reduce momentum in the marketplace. He added that investors could also start to take some profits, as it appears a July Fed rate cut is already baked into market expectations, with limited scope of more aggressive action.
However, Hansen added that there is still a lot of global uncertainty, so he expects selling pressure to be limited. “If I’m selling, it’s not to sell short; but I’m selling to reduce my exposure to neutral.”
John Weyer, co-director of commercial hedging Walsh Trading, also figures gold is due for a pullback.
“It moved higher on concerns about interest rates and risk on-risk off,” he said. “These concerns have subsided a little bit.”
Afshin Nabavi, head of trading with MKS, said he sees gold range-bound, although he prefers to trade it from the long side. “So I guess you could say bullish,” he said.
“After an impressive move higher early yesterday, gold has given back much of the gain disappointing investors; a close back above $1,410 might be seen as positive to help reinvigorate enthusiasm for the market. For now, I’d look for initial support at the psychological $1,400 level and resistance around $1,422.”
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, said he doesn’t see gold moving much in the next week, although he’s constructive on the metal for the longer term.
“Gold is almost priced for perfection now, so any disappointment on expectations, or easing of various geopolitical tensions, could see gold correct,” Day said. “For next week, we’ll say unchanged….However, most importantly, the sentiment has changed, and gold can now respond to positive developments. So whatever happens in the next week or two, gold is set to be meaningfully higher over the next six and 12 months.”
Colin Cieszynski, chief market strategist at SIA Wealth Management, said he is neutral on gold for the coming week.“I think all of the monetary news is out for the time being and focus is going to shift toward corporate earnings as results start coming out on Monday,” he said.