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Wall Street neutral on gold price, Main Street optimism hits 3-month low

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(Kitco News) - The sidelines in the gold market are getting a little crowded with Wall Street analysts projecting range-bound trading despite rising volatility in the near-term.

Meanwhile, Main Street investors remain bullish on gold next week even as sentiment drops to a three-month low, according to the latest Kitco News Weekly Gold Survey.

A majority of analysts are turning neutral on the yellow metal after prices broke below their 50-day moving average and continued strength in the U.S. dollar weighs on the yellow metal in the near-term.

This week, 16 market professionals took part in the Wall Street survey. A total of 8 voters or 50% called for gold to trade sideways next week. Meanwhile, 5 analysts or 31% said that they see higher prices in the near-term. Three analysts or 19% saw lower prices next week.

Meanwhile, 855 respondents took part in an online Main Street poll. Looking at the results, a total of 479 voters, or 56%, called for gold to rise. Another 222, or 26%, predicted gold would fall. The remaining 154 voters, or 18%, saw a sideways market.

Kitco Gold Survey

Wall Street

Bullish
Bearish
Neutral

VS

Main Street

Bullish
Bearish
Neutral

Although a clear majority of retail investors remain bullish on gold in the near-term, sentiment is at its lowest level since mid-June and has fallen for the last four consecutive weeks.

In the last survey, Main Street and Wall Street were both bullish on prices for the week now winding down. As 12:02 p.m. EDT, Comex December gold futures were trading at $1,501.80 an ounce down roughly 1% from the previous week.

Wall Street and Main Street both have an 18-16 winning record for the year to date, meaning respondents have been right 53% of the time.

Although some gold analysts have turned more cautious, they are not ready to give up on the yellow metal’s long-term rally.

Ole Hansen said that he expects gold prices to head lower next week but described the price action as “a weak correction in a strong uptrend.”

“I think the uptrend remains I place but we need to see it bounce from a lower price,” he said.

Hansen added that he would not be surprised to see gold prices test support at $1,450 in the near-term.

George Gero, managing director with RBC Wealth Management said that he sees potential for bargain hunting to support prices next week; however, he added that a strong U.S. dollar continues to be a major headwind for gold and that might not change anytime soon.

“The world needs a safe haven and right now that is the U.S. dollar,” he said. “But because bond yields are so low it wouldn't take much for investors to once again see gold as the ultimate safe-haven.”

Charlie Nedoss, senior market strategist with LaSalle Futures Group, described the price action as just a flushing out of weak hands in the marketplace.

He added that with gold price below their 50-day moving average his next target is support at $1,470 an ounce.

Kevin Grady, president of Phoenix Futures and Options, said that after the rally this summer, it is now time for gold prices to test support.

Although there is more risks to the downside in the near-term as volatility picks up, Grady said that he remains neutral on gold as prices ultimately continue to consolidate.

“I see any drop in the price as a healthy correction,” he said. “The best way to see if a market is strong is to sell it.”

Although gold prices are ending the week down 1%, some analysts remain bullish in the near-term as uncertainty continues to dominate the marketplace.

“There are too many issues on the world stage that are supportive of gold, from Brexit to impeachment, trade disputes and easy money,” said Adrian Day, chairman and chief executive officer of Adrian Day Asset Management.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.