Gold investors may be frustrated with the precious metal’s listless performance, as the price has been struggled to hold on to recent gains but they are not ready to throw in the towel just yet.
Sentiment remains unequivocally bullish in the short term as both Wall Street analysts and Main Street investors expect to see higher prices in the near term, according Kitco News’ Weekly Gold Survey.
The bullish call comes as gold prices remain trapped in a narrow trading range, with critical support at $1,270 an ounce and strong resistance between $1,295 and $1,300 an ounce.
Bob Haberkorn, senior commodities broker with RJO Futures, the lone gold bear said that the yellow metal will continue to struggle if equity markets can stabilize at current levels.
“I think you have to continue to sell the rallies because they have proven to be short-lived,” he said. “I don’t think gold has bottomed out just yet.”
However, he added that although prices could drop next week, he would not be selling.
“The stock market can turn around as quickly as it bounced off the bottom, while positive movement on the dispute with China is by no means certain,” he said. “The monetary background remains positive for gold.”
Sean Lusk, director of commercial hedging with Walsh Trading, agreed that equity markets have performed relatively well give all the geopolitical unrest and rising economic growth concerns.
He added that resilient investor optimism in equity markets has reduced gold’s attraction as a safe-haven asset. However, he also said that he is reluctant to short the yellow metal in the current environment.
“Technically we are seeing lower highs and the trend looks bearish but central banks continue to amass gold and I think that will continue to support prices at current levels,” he said. “There is a lot of political noise out there and you shouldn’t rule out gold as a safe-haven asset.”
Lusk said that although he is neutral on gold in the near-term he remains a long-term bull.
Afshin Nabavi, head of trading with MKS, said that although frustration is growing among gold investors, he still sees the yellow metal as the best safe-haven asset in the marketplace.
“Geopolitical tensions are ridiculously high and I don’t see any better investment than gold at the moment,” he said.
Nabavi said that if gold prices can push back above $1,285 there is a chance that it could make another run to $1,300 an ounce.
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, said that he is bullish on gold as a rising trade tensions between the U.S. and China are finally taking their toll on equity markets and the U.S. dollar.
“In addition, the increasing breakdown between the Democratic Congress and Trump White House, the incessant investigations, and the growing march towards impeachment proceedings for President Trump has finally seemed to have its effect on markets,” he said. “As these moves gather momentum, it will be positive for gold, though there is a limit to how much the dollar can decline given the perilous state of most other currencies.”
Andrew Hecht, editor of the Hecht Weekly Commodity Report, said that he expects to see higher gold prices next week as market volatility rises and as the U.S. dollar failed to rally after hitting a two-year high Thursday.
Reference: Kitco
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