Gold-price sentiment overwhelmingly bullish
(Kitco News) - Participants in the weekly Kitco gold-price survey look for the metal to maintain its upward momentum next week as central banks and governments keep rolling out measures to prop up an economy that is being battered by the COVID-19 pandemic..
"The path of gold will be windy, but it's invariably higher as the costs of COVID-19 sink in," said Adam Button, managing director of ForexLive.
The U.S. Federal Reserve announced another $2.3 trillion effort Thursday to prop up local governments and businesses. The move came on a day when weekly initial jobless claims rose another 6.6 million, bringing the total for the last three weeks to nearly 17 million.
"I continue to be bullish for gold," said Kevin Grady, president of Phoenix Futures and Options LLC. "Although equities seem to have found stable footing, I still believe that the amount of money flooding into the global banking system coupled with historically low interest rates will fuel gold above $1,850."
Kitco News did its gold survey one day earlier than normal this week, as markets around much of the world are closed on Good Friday.
All fifteen market professionals who took part in the Wall Street survey look for gold to rise next week.
This one-sided view on Wall Street is consistent with positioning data for money managers compiled by the Commodity Futures Trading Commission. The last report, which was through the week ending March 31, showed money managers collectively held nearly 157,000 bullish positions in gold futures but only a little more than 4,000 bearish ones. Standard Chartered reported Thursday that holdings of gold by exchange-traded products, an investment vehicle used by many institutional investors, are up 40 metric tons so far this month to a record 3,225 tons.
Meanwhile, 1,172 votes were cast in an online Main Street poll. A total of 821 voters, or 70%, looked for gold to rise in the next week. Another 222, or 19%, said lower, while 129, or 11%, were neutral.
In the last survey for the current trading week now winding down, 92% of Wall Street respondents and 67% of those on Main Street were bullish. Shortly before 11 a.m. EDT on Thursday, they were right, as Comex June gold was trading up 5% for the week at $1,727.60 an ounce.
"Gold prices are still looking bullish next week," said Phil Flynn, senior market analyst with at Price Futures Group. "Not only is the market benefiting from a risk-on environment, but the longer-term implications from U.S. quantitative easing and global economic bailouts will give gold a good fundamental basis for moving higher."
Daniel Pavilonis, senior commodities broker with RJO Futures, said he looks for the June futures to move back above the $1,742.60 peak hit this week. Stocks also appear to be recovering, opening the door for gold to move higher as well, he said. Both had fallen in conjunction with one another during a roughly two-week period in March.
Pavilonis also cited another high number of U.S. initial jobless claims reported Thursday, as well as more moves by the Federal Reserve to prop up the economy and markets, including now buying up to $500 billion in short-term debt from states, counties and cities.
"This is the right environment for the metals to move higher, gold especially," he said.
Colin Cieszynski, chief market strategist at SIA Wealth Management, and Charlie Nedoss, senior market strategist with LaSalle Futures Group, also described themselves as bullish based on central-bank actions.
"Some of the stuff from the Fed looks awfully inflationary," Nedoss said. "They keep throwing truckloads of money at this. It seems as if [while] equities rebound, we [gold prices] are starting to run with the inflation trade."
Phillip Streible, chief market strategist with Blue Line Futures, also said higher.
"Investors still are uncertain if the rally in the U.S. equities will hold, therefore that underlying need of safety exists in the back of everyone's mind," he said.
Sean Lusk, co-director of commercial hedging, sees June gold futures continuing to rise to an eventual target of $1,827. "We have a 'Perfect Storm' for gold to the upside," he said.