Main Street turns bullish on gold while Wall Street remains cautious on prices
(Kitco News) - There are mixed messages in the gold market as some Wall Street analysts expect strong labor-market data to weigh on gold prices next week; meanwhile, bullish sentiment has picked up among Main Street investors, according to the latest Kitco News Weekly Gold Survey.
According to some analysts, November U.S. labor-market growth of 266,000 jobs – the biggest increase in 10 months – will continue to boost equity markets and weigh on safe-haven assets like gold.
“Today's surprisingly strong jobs report is an albatross around the neck of our favorite metal -- at least for the short-term,” said Richard Baker, editor of the Eureka Miner Report. “I think it likely that the stock rally will continue into next week and the yellow metal will retest the $1,450 level.”
Sixteen market analysts participated in this week ’s Wall Street survey. Four analysts, or 27%, said they were bullish on gold next week. Seven analysts, or 44%, said they see lower prices next week. Five analyst, or 31%, saw prices trading sideways.
Meanwhile, 792 respondents took part in an online Main Street poll. A total of 487 voters, or 61%, called for gold to rise. Another 183, or 23%, predicted gold would fall. The remaining 122 voters, or 15%, saw a sideways market.
Sentiment among retail investors rebounded sharply from last week’s six-month low; only 44% were bullish for the current week. Wall Street analysts were strongly neutral in previous week’s survey. Gold prices are currently preparing to end the week in negative territory. February gold futures last traded at $1,463.60 an ounce, down 0.62% for the week.
Looking ahead, with no clear majority, Wall Street analysts continue to see a grinding market as prices remain caught between support at $1,450 and resistance at $1,500.
Fawad Razaqzada, technical analyst, at City Index, said that although gold prices could push lower in the near term, he is bullish on gold. However, he added that because the metal remains range-bound, prices could be see a near-term bounce off the lower end of their channel.
Afshin Nabavi, head of trading with MKS (Switzerland) SA, said that he is not expecting gold to break out of its current range. He added that even if momentum in the U.S. labor market does weigh on gold in the near term, there is enough uncertainty to support gold.
“Investors will continue to buy and sell the trade-war headlines,” he said. “But because of all the uncertainty, I still like playing gold from the long side.”
Daniel Pavilonis, senior commodities broker with RJO Futures, said that stronger equity markets will weigh on gold in the near term. He added that he is watching the yellow metal’s 200-day moving average near $1,420.
Mark Leibovit, publisher of VR Metals/Resource Letter, said that he remains bullish on gold but he is looking to re-enter the market at lower prices. He added that he is watching to see if prices will fall to $1,400 an ounce.