'It's one step forward, two steps back' for gold bulls, but Wall Street remains bullish on gold price - Kitco's gold survey
Editor's Note: Don't miss Kitco's LIVE interview with Gareth Soloway, chief market strategist of InTheMoneyStocks.com, on Tuesday, June 29, at 4:00 pm EST, to be hosted by anchor David Lin. Comments and questions will be taken.
(Kitco News) - Wall Street and Main Street are once again bullish on gold next week, both expecting higher prices as the precious metal continues to trade just below the $1,800 an ounce level, according to Kitco's weekly gold price survey.
Gold is ending the week nearly flat, up 0.22% after registering the worst monthly performance in more than four years in June. August Comex gold futures were last trading at $1,782.20 an ounce.
After a mixed employment report from June, markets will be focusing on the Federal Reserve's June monetary policy meeting minutes. All eyes will be on whether the hawkish sentiment matches up with the comments made during the meeting itself.
"Markets are expecting a hawkish tilt, and anything that tells us there is no hawkish tilt is a little bit less than people were pricing in, and gold could rally," TD Securities head of global strategy Bart Melek told Kitco News.
Kitco's gold price survey results from this week showed that out of the 13 participating analysts on the Wall Street side, 69.2% were bullish on prices next week, while the other 30.8% were neutral. There were no bearish votes this time around.
On the Main Street side, out of the 256 participating retail investors, 49.6% were bullish on prices next week, 25.8% were bearish, and 24.6% were neutral.
Many analysts described this week's price action as a frustrating one for the gold bulls.
"It's been one step forward and two steps back. Gold couldn't hold $1,800 and went down to mid-April lows of around $1,760. Now we are popping back up on unemployment data. Everything screams inflation, but the problem has been the rally in the U.S. dollar," said Walsh Trading co-director Sean Lusk.
The $1,800-$1,815 area will be the first obstacle for gold next week, said Bannockburn Global Forex managing director Marc Chandler. "I look for gold to correct higher after finding support near $1,750," Chandler noted. "The momentum indicators appear to be bottoming."
A close above $1,820 an ounce is the key level to watch as it could signal a breakout point for the yellow metal, RJO Futures senior commodities broker Daniel Pavilonis told Kitco News.
"Gold has seen a washout at the end of the second quarter. The same thing happened last quarter around the Fed announcement. We are seeing support along the 200-day moving average," Pavilonis said. "The $1,820 is the breakout level. If we close above it, gold could go much higher and even make new highs, especially with the U.S. dollar topped out."
Analysts did warn that the trading volume will be light on Monday because of the Fourth of July long weekend in the U.S.
"I expect today and Monday to be quiet for the U.S. holiday, but overall, gold technically looks like it has turned a corner, and the current bounce may continue," said SIA Wealth Management chief market strategist Colin Cieszynski.
A good way to tell whether the trend in gold will be bullish or bearish next week is to watch the $1,750-$1,800 range, said Kitco's senior analyst Jim Wyckoff.
"Prices are trapped in a trading range of $1,750 to $1,800. The direction in which prices' break out' of that range is likely to be the direction of the next trending price move," Wyckoff explained.