Wall Street and Main Street both look for gold to continue a price recovery next week, based on the Kitco News weekly gold survey.
Gold recouped the $1,300-an-ounce level during the latter part of this week after hitting its weakest price of 2018 on Monday. Catalysts behind the comeback included a technical bounce, Federal Open Market Committee minutes that did not show any signs that policymakers want to tighten any more than they have already signaled, and cancellation of a summit between the leaders of the U.S. and North Korea.
Eighteen market professionals took part in the survey. There were 11 votes, or 61%, calling for gold prices to rise. Another four voters, or 22%, were looking for gold prices to ease, while three voters, or 17%, see prices unchanged or sideways.
Meanwhile, 730 voters responded in an online Main Street survey. A total of 393 respondents, or 54%, predicted that gold prices would be higher in a week. Another 243 voters, or 33%, said gold will fall, while 94, or 13%, see a sideways market.
For the trading week now winding down, Wall Street voters were split, with 44% calling for higher and the same for lower, while Main Street leaned slightly bearish with 49% of respondents expecting prices to decline. Around 11 a.m. EDT, Comex June gold was up 0.9% for the week so far to $1,302.80 an ounce.
“Gold rebounded…after the Fed minutes seemed to suggest that they were willing to let inflation run hot,” said Phil Flynn, senior market analyst with Price Futures Group. “Even though the strong dollar weighed on the market last week, strong physical demand and increasing geopolitical risk should allow us to have a bullish week.”
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management,
also looks for gold to rise.
“The factors that have weakened gold in recent weeks and months—easing of international tensions, particularly over Korea; higher interest rates; and a strong stock market—are all in the process of unraveling,” Day said. “Higher rates and a June hike [are] already priced into the gold market, but if the Federal Reserve goes slower after that, it will be positive for gold.”
Sean Lusk, director of commercial hedging with Walsh Trading, figures gold could challenge $1,330 again in the weeks ahead.
“There is some uncertainty in the air with a little uneasiness in the stock market,” Lusk said. “We hit bargain hunting under $1,300.”
Added Adam Button, managing director of ForexLive: “The geopolitical sands are shifting and hopes for a more peaceful world have been dashed by moves on Iran and North Korea. That uncertainty will lend a bid to gold.”
Meanwhile, David Madden, market analyst at CMC Markets, is among those who are bearish on gold in the near term. He added that gold has been in a two-month downtrend and this move appears to be a so-called dead-cat bounce. Madden said that he would need to see prices above $1,326 to call an end to the current downtrend.
Neil Mellor, currency strategist at New York Bank of Mellon, said he is bearish on gold, commenting that he would need to see a rise in wage inflation in next week’s U.S. employment numbers to see a case for higher prices. Further, he noted there is no inflation in the global marketplace.
Ralph Preston, principal with Heritage West Financial, also looks for gold to ease.
“We might see a pop higher on a geopolitical event, but it will be difficult for gold to sustain a rally if the U.S. dollar begins to rally on safe-haven flows,” Preston said.
Ken Morrison, editor of the newsletter Morrison on the Markets, does not look for a big move either way in the next week.
“Gold shook off the dollar strength and managed to rally near the downtrend line of resistance at $1,310,” Morrison said. “I expect the market spends most of the next week consolidating in a $1,295-$1,310 range, basically a sideways pattern.”
Reference: Kitco
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