A dovish-enough Federal Reserve and a new salvo from China in the ongoing trade war generated new renewed optimism among gold bulls, according to the Kitco News weekly gold survey.
Early Friday morning, it looked like gold would have its first losing week in a month. But the yellow metal rebounded sharply when China announced its counter tariffs, and Federal Reserve Chair Jerome Powell made dovish comments at Jackson Hole.
The late week rally has been enough to shift some last-minutes votes in this week’s gold survey.
In the last survey, Main Street and Wall Street were both bullish on prices for the week now winding down. Just before 12 p.m. EDT, Comex December gold futures were trading at $1538.10 an ounce up nearly 1% since last Friday.
Wall Street and Main Street both have an 18-13 winning record for the year to date, meaning respondents have been right 58% of the time.
David Madden, market analyst at CMC Markets said that although Powell sent mixed messages in his Jackson Hole speech, the message still had a dovish tilt, which will continue to support gold prices.
“The overall message is that the Fed is ready to act if the economy gets worse,” he said. “I don’t think we are going to see a lot of improvements in the near-term and gold will continue to go higher as the global economy worsens.”
Bill Baruch, president of Blue Line Futures, said that he also sees higher gold prices in the near-term as it looks like Powell “nudge the monetary policy needle” to more dovish territory.
Colin Cieszynski, chief market strategist at SIA Wealth Management, said that although Powell is reluctant to embark on a new easing cycle, the growing trade war create enough pressure to do something.
However, Cieszynski said that he is neutral on gold in the near-term because momentum indicators are still negative. He added that how much of this trade-war uncertainty is already priced into the market.
Although prices may struggle to move higher next week, Cieszynski said that he is in no hurry to sell gold.
“Gold is in a well-established uptrend and there is showing really strong support at $1,500 and $1,480,” he said.
Adrian Day, chairman and chief executive officer of Adrian Day Asset was the lone gold bear in this week’s survey but even is negative outlook is conditional.
“Any pullback will be temporary, since we are most likely to see easier policies before year end and the gold market recognizes this,” he said.
Reference: Kitco
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