Wall St., Main St. look for gold prices to strengthen
(Kitco News) - Wall Street and Main Street remain bullish in the weekly Kitco News gold survey, with traders saying they anticipate the massive fiscal stimulus and monetary accommodation will continue to underpin the yellow metal.
Twelve out of 15 Wall Street voters, or 80%, said they are bullish for the week ahead. One voter, or 7%, called for lower prices, while two, or 13%, were neutral.
Meanwhile, 1,031 votes were cast in an online Main Street poll. A total of 729 voters, or 71%, looked for gold to rise in the next week. Another 192, or 19%, said lower, while 110, or 11%, were neutral.
In the last survey for the current trading week now winding down, Wall Street and Main Street respondents alike were bullish. Around 11 a.m. EDT on Friday, Comex June gold was 2.6% higher for the week to $1,743.40 an ounce.
“Gold look like it will have another solid week,” said Phil Flynn, senior market analyst with Price Futures Group. “News that the Congress passed another $480 billion in coronavirus relief aimed at small businesses will further make buyers worried about government debt seek safety in gold.”
Kevin Grady, president of Phoenix Futures and Options, also said he is bullish, pointing out that gold tends to hold up on any sell-off attempts. “The massive global printing of currency will eventually take gold above $2,000,” he said.
Assuming June gold closes above $1,734, Charlie Nedoss, senior market strategist with LaSalle Futures Group, looks for the metal to test its recent highs.
“We held onto [support at] moving averages this week,” he said. “We tested the 10[-day moving average) and we tested the 20….I’m looking for some dollar weakness into next week.”
Richard Baker commented that gold’s recent strength has been impressive because the metal has been able to hold up even when the U.S. dollar is strong.
In a week where the West Texas Intermediate crude front-month contract went negative and weekly first-time jobless claims were 4.43 million, “gold finds plenty of market uncertainty to resume its rally to $1,800 per ounce and perhaps higher in the coming months,” he said. “This condition is likely to persist until an effective vaccine is produced to battle COVID-19.”
Sean Lusk, co-director of commercial hedging with Walsh Trading, also looks for gold to rise, but added that there could be some profit-taking toward the end of the week around the monthly U.S. jobs report. “If we settle above $1,750, we could move up to $1,800,” he added.
George Gero, managing director with RBC Wealth Management, said he looks for gold to strengthen but also for the market to be volatile due to May options expiration at the start of next week. This may prompt traders on both sides of the market to even out positions, he explained.
“You’re going to have a lot of volatility after options expiration. On top of everything else, we’ve had margin increases too,” he said, referring to an announcement late last month that Comex increased the deposit futures traders must make to take out a position.
Meanwhile, Daniel Pavilonis, senior commodities broker with RJO Futures, said he anticipates there could be a risk-off move next week and this could be one of those instances where gold falls along with stocks. There are several major U.S. economic reports next week, as well as a meeting of the U.S. Federal Open Market Committee.
“These [economic] numbers are not going to look good. And the Fed...already pulled a lot of tricks out of their hat, so I don’t know how much more they have,” Pavilonis said.
Colin Cieszynski, chief market strategist at SIA Wealth Management, is among those who is neutral on gold for the next week.
“I generally think that a number of markets are moving into sideways ranges to digest and consolidate the large swings of the last two months,” he said.
Adam Button, managing director of ForexLive, also said neutral.
“You can see investor money beginning to trickle in into the gold-mining majors,” he said. “If it can climb above $1,747, the trickle will soon become a flood, but the timing is uncertain.”