Wall Street, Main Street bullish on gold but neutral sentiment growing
(Kitco News) -Despite continued bullish sentiment in gold, more Wall Street analysts are heading to the sidelines as the yellow metal needs a new catalyst to push higher, according to the latest Kitco News Weekly Gold Survey.
Meanwhile, Main Street investors remain strongly bullish on gold in the short term.
Kevin Grady, president of Phoenix Futures and Options, said that while $17 trillion in negative interest rates and renewed economic uncertainty in Europe will keep a floor under gold, he sees strong equilibrium in the market.
“Any move to $1,520 is sharply sold. But any move towards $1,480 is quickly bought so maybe we have found gold’s fair value for now,” he said.
This week, 19 market professionals took part in the Wall Street survey. A total of 9 voters or 47% called for gold to be higher. Meanwhile, four analysts or 21% said that they see lower prices in the near-term. Six analysts or 32% saw sideways price action next week.
The survey saw its largest neutral vote since late June.
Meanwhile, 1,033 respondents took part in an online Main Street poll. Looking at the results, a total of 613 voters, or 59%, called for gold to rise. Another 244, or 24%, predicted gold would fall. The remaining 176 voters, or 17%, saw a sideways market.
In the last survey, Main Street and Wall Street were both bullish on prices for the week now winding down. Despite some headwinds earlier this week, including a more hawkish than expected Federal Reserve, as 12:01 p.m. EDT, Comex December gold futures were trading at $1,510.50 an ounce up nearly 1% from the previous week.
This week’s positive gains end three weeks of consecutive losses.
Wall Street and Main Street both have a 19-16 winning record for the year to date, meaning respondents have been right 54% of the time.
According to many analyst, sentiment in the gold market remains firmly bullish as uncertainty continues to dominate financial markets.
“I don’t think anyone wants to go home short gold anytime soon,” said Afshin Nabavi, head of trading with MKS (Switzerland) SA. “I think there is a better chance of seeing gold at $1,520 and at $1,480. The economic situation is not getting any easier,” he said.
Adam Button, managing director at Forexlive.com, said that gold appears to be forming a base between $1,480 and $1,510; he added that he is bullish on gold in the near-term as he expects the latest trade talks between the U.S. and China to break down.
Some analysts have noted that gold’s resilient price action above $1,500 this week after the Federal Reserve signaled Wednesday that it is expecting to hold interest rates between 1.75% and 2.00% through 2020.
However, some analysts expect that because of slowing growth in the global economy, it is only a matter of time before the U.S. central bank will be forced to cut interest rates again.
“When push comes to shove, this central bank will do what comes most natural for central banks, namely ease,” said Adrian Day, chairman and chief executive officer of Adrian Day Asset Management. “And that is positive for gold.”
Ole Hansen, head of commodity strategy at Saxo Bank, said that he is bearish to neutral on gold. Although he doesn’t want to short the precious metal, he said that improved investor sentiment in equity markets could weigh on gold prices in the near term.
However, in the long term, Hansen said that he remains bullish on gold.
“The path to lower interest rates is still there and that is ultimately good for gold,” he said. “Renewed weakness in equities could prompt the Fed to continue easing.”
Mark Leibovit, publisher of VR Metals/Resource Letter, said that he is looking for a deeper correction before moving higher. “I would like to see Gold near $1420 in the next few weeks,” he said.
Although bullish on gold Nabavi said that he would also like to see lower prices. “It would be nice to buy some more gold at a lower price,” he said.