Little conviction in gold market as trade talks ebb and flow
The latest Kitco News Weekly Gold Survey shows Wall Street analysts nearly caught in a three-way tie, while only a slight majority of retail investors remain bearish on gold.
“One day a trade deal with China is on and then the next day it’s off. This uncertainty is supporting gold but it’s not enough to drive gold prices higher,” said Afshin Nabavi, head of trading with MKS (Switzerland) SA.
This week, 16 market professionals took part in the Wall Street survey. In a tie, five analysts or 31% said they see higher, and other five analysts saw a sideways market next week. Six analysts, or 38%, predicted gold would fall.
Meanwhile, 587 respondents took part in an online Main Street poll. A total of 292 voters, or 50%, called for gold to rise. Another 173, or 29%, predicted gold would fall. The remaining 121 voters, or 21%, saw a sideways market.
In the last survey, Main Street and Wall Street both proved to be wrong calling for higher prices in last week’s survey. As of 12:13 p.m. EST, December gold futures last traded at $1,463 an ounce, down 0.37% from the previous week.
According to most analysts, the main driver for gold in the near-term remains the ongoing trade dispute between China and the U.S.
Adam Button, managing director for Forexlive.com, said that he is bullish on gold.
“The timing is tricky but cracks are beginning to appear in the phase one trade deal and if it breaks down, that would be a major catalyst for gold,” Button said. Right now, the market has largely priced in a deal but even if there is a deal, it may be less than hoped.”
However, on the other side, Button said that if the U.S. delays the Dec. 15 tariffs and there is progress made between the two countries, then gold prices would drop.
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, also named the trade talks as the primary catalyst to push gold higher in the short term. But, he also noted that “wobbly” global equity markets heading into year end could provide some support for gold.
Richard Baker, editor of the Eureka Miner Report, said that a top in equity markets could provide some momentum for gold next week.
“The S&P 500 made an all-time intraday high Tuesday (3,127.64). I believe it likely that this is a top for the time being so the prospects for gold moving higher on falling stocks are positive,” he said.
Sean Lusk, co-director of commercial hedging with Walsh Trading, said that he is bearish on gold in the near-term as speculative interest remains high. He added that traders might shed some bullish bets next week ahead of the U.S. Thanksgiving holiday. He added that resilient strength in the U.S. dollar could also weigh on the yellow metal in the near-term.
Although he is bearish on gold in the short-term, Lusk added that even with the recent selling pressure, the market is still in a strong uptrend.
“There is still a strong sense of uncertainty and interest rates are still fairly negative and in that environment, you want a tangle asset like gold,” he said.
Mark Leibovit, publisher of VR Metals/Resource Letter, said that he is also bearish on gold in the near-term but remains bullish long-term. He added that he sees the selloff running to mid-December with prices fall back to $1,400 an ounce.