Wall St., Main St. upbeat about short-term outlook for gold prices
(Kitco News) - Respondents in the weekly Kitco News gold survey are bullish on gold for the week ahead, with some Wall Street professionals suggesting monetary policy and fiscal stimulus will lead to another test of the top end of the recent trading range.
“God has been in a battle but should end higher next week,” said Phil Flynn, senior market analyst at Price Futures Group. “Gold has had a tough time breaking out on a mix of fears about the coronavirus slowing demand versus global economic stimulus. Yet with the Fed saying that they are going to stay the course and do whatever it takes, gold bulls will probably do the same.”
Sixteen Wall Street professionals took part in this week’s survey. Nine, or 56%, called for prices to rise, while just two, or 13%, said lower. Five voters, or 31%, were neutral.
A total of 1,299 votes were cast in an online Main Street poll. Of these, 688 respondents, or 53%, looked for gold to rise in the next week. Another 302, or 23%, said lower, while 309, or 24%, were neutral.
In the last survey for the current trading week now winding down, Wall Street and Main Street were both bullish. As of 11:02 a.m. EDT on Friday, Comex August gold was $12.90 higher for the week so far to $1,250.20 an ounce.
Phillip Streible, chief market strategist with Blue Line Futures, said gold is “long overdue” for a breakout after consolidating for some three months.
“The Federal Reserve is trying their hardest to devalue the dollar index and try to boost exports to countries like China and help transport the economy,” Streible said. A weaker dollar tends to support gold prices.
Jim Wyckoff, senior technical analyst with Kitco, said he looks for higher gold prices “as bulls show resilience amid rallying global stock markets.”
Charlie Nedoss, senior market strategist with LaSalle Futures Group, is one of several Wall Street professionals who said they look for gold to test the $1,760 area.
“I [look for] the dollar to continue to come off. We held onto the 20-day moving average [in gold],” Nedoss said.
Added Adam Button, managing director of ForexLive, “It’s early, but some animal spirits are returning, and gold has performed better in risk-on environments. $1,760 remains key, but a near-term test is increasingly likely.”
Richard Baker, editor of the Eureka Miner’s Report, listed a target of $1,760 next week, calling for the metal to rise to $1,800 or even higher this year. The interest-rate situation remains bullish. Baker also pointed out that gold has been rising lately when stocks do likewise, with a 0.82 positive correlation between the markets.
“Those two typically move in opposition during uncertain times; lately, they have been traveling down the same road,” Baker said. “Much of these behaviors can be explained by the developing tension between public-health science and political expediency, at least in the U.S.
“Accelerated reopening of businesses supports a V-shaped recovery and this notion is allied by improving economic data. However, if reopening shortcuts public-health measures, the risk of a devastating second wave [of COVID-19] increases. This is evidenced by spiking infection rates and hospitalizations in some southern and western states. Stocks are propelled by the optimistic recovery scenario; safe-haven gold is underpinned by the possibility of the latter outcome.”
Meanwhile, Daniel Pavilonis, senior commodities broker with RJO Futures, looks for gold to fall back as it remains within its trading range.
“Gold seems like it’s still trapped in a range,” he said. “I would say next week, if I had to pick a side, probably to the downside. We’re at the upper end of the range now. So maybe we pull back a bit.”
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, also anticipates softer prices in the short term.
“I am still expecting a pullback in gold, though given the long-term fundamental factors, gold is resisting and pulling back very hesitatingly, and any factor out of the blue could see gold back up,” Day said. “I’ll go with down for next week. Gold has shot up too far too fast, and is losing momentum, as seen by ETF [exchange-traded-fund] inflows and coin sales.”
Colin Cieszynski, chief market strategist at SIA Wealth Management, said he remains neutral on gold in the short term.
“It’s the last week before summer, gold remains range-bound $1,675 to $1,775, central bankers are done talking for a couple of months and there are no major economic reports,” he said.