Geopolitical Worries Seen Boosting Prices
(Kitco News) - Participantsin the Kitco News weekly gold survey look for gold to build upon this week’sgains, helped in large part by geopolitical tensions but also technical-chartsupport.
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Bullish Bearish Neutral Gold surgedmidweek as the market factored in potential U.S. military action in Syria,before later pulling back.
Sixteen marketprofessionals took part in the weekly survey. Eleven respondents, or 69%,called for gold prices to rise over the next week. Another three voters, or 19%,looked for gold to fall, while two, or 13%, see a sideways market.
Meanwhile, 2,142voters responded in an online Main Street survey, the most since mid-January. Atotal of 1,764 respondents, or 82%, predicted that gold prices would be higherin a week. Another 267 voters, or 12%, said gold will fall, while 111, or 5%,see a sideways market.
For the trading week nowwinding down, 57% of Wall Street voters and 47% of Main Street voters werebullish. They were right as of 11:01 a.m. EDT, as Comex June gold was up 0.9 % for the weekso far to $1,348.40 an ounce, although down from Wednesday’s $1,369.40 peak, whichwas the highest price since late January.
“Thesedips are going to provide buying opportunities,” said Sean Lusk, director ofcommercial hedging with Walsh Trading. “It’s very headline-driven, though.”
JimWyckoff, senior technical analyst with Kitco, said “higher on likely rise ingeopolitical tensions.”
AdrianDay, chairman and chief executive officer of Adrian Day Asset Management, and
Adam Button, managing director of ForexLive, saidthe same, in particular citing worriesabout potential military action surrounding Syria.
“The Syria issue is notover by any means, and there is a risk of a direct military confrontationbetween the U.S. and Russia, which would have enormous consequences,” Day said.“Moreover, Washington remains in turmoil and monetary factors continue to befavorable.”
Added Button: “Gold is a trade about bombs dropping rightnow. [U.S. President Donald] Trump has delayed the strikes on Syria but they’reinevitable sometime in the weeks ahead.”
A Kitco reader fromFlorida named Max offered a similar view. He said, “Geopolitics are back after chemical weapons were used oncivilians in Syria earlier this week. This event has some uncertainty, and goldwill benefit from this.“
Charlie Nedoss, seniormarket strategist with LaSalle Futures Group, looks for support in gold to holdwith crude oil strong, the U.S. dollar retracing and geopoliticaluncertainties. As of when he spoke, the 50-day moving average for June gold wasat $1,036.30, the 20-day was at $1,038 and the 10-day was at $1,040.50.
Meanwhile, Kevin Grady,president of Phoenix Futures and Options LLC, sees potential for gold to fall backfurther on more long-liquidation selling.
He pointed out that thenumber of open positions rose Wednesday by some 32,000 lots, meaning freshbuying. Then preliminary data shows a 15,000 decline during a price pullbackThursday. For now, many of the fresh longs (bullish traders) are staying in themarket, probably in case of a U.S. missile strike on Syria, Grady said.
However, “if you do notsee any missile strikes this weekend and the stocks stay high, gold will selloff on Monday,” Grady concludes.
Ken Morrison, editor ofthe newsletter Morrison on the Markets, also sees a pullback.
“The midweek rally on high volume, responding to U.S. threatsof military action in Syria, was accompanied by a surge of new money into gold,”he said. “But the apparent easing of tensions combined with a quick rejectionat the January and February twin peak highs saw much of that money come out of goldyesterday. Without a new catalyst to take out overhead resistance at $1,370, Iexpect gold to drift lower but still maintain some political-risk premium.There's minor trendline support at $1,330 that I expect is tested in the weekahead.”
By Allen Sykora
For Kitco News
Follow @AllenSykora
asykora@kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.