Kitco News Gold Survey: Prices Seen Rising Rise On Trade-War Fears
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(Kitco News) - The biggest camps on Walland Main Street look for gold to rise next week, with traders and analyststending to cite economic uncertainty and U.S. dollar weakness as a result ofPresident Donald’s Trump announcement of tariffs on steel and aluminum.
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Bullish Bearish Neutral Twenty-one market professionalstook part in the weekly Kitco News Wall Street survey. There were 14 votes, or 67%,calling for gold prices to rise over the next week. Another three voters, or 14%,looked for the metal to fall, while four, or 19%, look for a sideways market orare neutral.
Meanwhile, 541 voters tookpart in an online Main Street poll. A total of 272 voters, or 50%, saidbullish. Another 189, or 35%, said lower, while 80, or 15%, were neutral.
For the trading week nowwinding down, there was not a majority viewpoint on either Wall Street or MainStreet. Thirty-seven percent of Wall Street voters called for gold to rise andanother 37% were neutral, while 47% of Main Street voters were bullish. Shortlybefore 11 a.m. EST, Comex April gold wasdown 0.6% for the week so far to $1,322.20 an ounce. But while on thedefensive, the market snapped back from Thursday’s lows as stocks and thedollar slid amid news about tariffs.
Not counting the currentweek, Wall Street and Main Street are both 3-4 so far in 2018. This comes afterMain Street had a winning percentage of 62% in 2017, while Wall Streetforecasters were right 59% of the time.
KenMorrison, editor of the newsletter Morrison on the Markets, is among themajority looking for gold to benefit from nervousness about an escalating tradewar.
“The prospects of a trade war with most of theU.S. strongest trade partners and allies have suddenly changed the sentimenttoward the dollar and thus gold,” Morrison said. “Thursday's big decline wasaccompanied by a shakeout of open interest, down 15,000 contracts on the day onabove-average futures volume, signaling capitulation. Gold will likely havesupport until more details are known on the proposed tariffs, with a return to$1,335 possible. Will Canada and Mexico be exempted as they were in 2002? Theyaccount for 25% of all U.S. steel imports and [are] obviously important tradepartners.”
Adam Button, currency analyst atForexlive.com, looks for gold to be higher for similar reasons.
“Themarket is confused by Trump’s newly announced tariffs and the risk of more,”Button said. “Gold will be an increasingly attractive safe haven.”
PhilFlynn, senior market analyst with at Price Futures Group, commented thattariffs also could support gold due to the potential for inflation. Highertariffs would raise the cost of a wide range of items, such as cars (metals formanufacturing) to soda (aluminum used for cans), he said.
“I am bullish on gold for next week,”said Colin Cieszynski, chief market strategist at SIA WealthManagement. “On Thursday,the bottom of a $1,300 to $1,360 channel held with a bullish hammer candle,indicating a trading bounce may be starting. Also, the Trump steel tariffappears to be rattling market confidence and could send some people looking forhavens like gold. Note that back in 2002, then-President Bush triggered amajor downleg in the market by introducing a steel tariff.”
Richard Baker,editor of the Eureka Miner Report and who is also bullish, commented that oneday’s worth of news can make a big difference in markets.
“Gold, after having a bad week against a broadset of assets and nearly breaching the $1,300 level, has a foundsafe-haven boost on global trade war and inflation fears...,” he said, callingfor gold to rise. “The presidents surprising announcement on steel and aluminumtariffs yesterday brought the U.S. dollar index off its six-week high (90.91)and sent global equities reeling. Although the actual implementation of tariffsmay be milder than anticipated, the yellow metal will no doubt remain insafe-haven mode for the near term.”
Adrian Day, chairman and chief executive officer of AdrianDay Asset Management, looks for the metal togain ground on ideas that a sell-off after congressional testimony this week byFederal Reserve Chairman Jerome Powell was overdone.
“The Fed will remaincautious in raising rates, particularly given high levels of debt, including atthe federal government level, where higher rates could significantly affectcosts of debt,” Day said. “Slowly rising rates, when rates lag inflation, ispositive for gold, as we saw in 2005-2007 and 1976 to 1980, for example.”
Meanwhile, Ralph Preston,principal with Heritage West Financial, was among those who see gold lower,commenting that the path of least resistance “appearsto be down.”
KevinGrady, president of Phoenix Futures and Options LLC, described himself asneutral but looking for volatility. He commented that the gains that occurredin gold after news of Trump’s tariffs were likely due to short-term speculativebuying, and he doubts many big long-term bets have come into the market justyet.
“It[gold] is going to be moving all over the place,” he said. “It’s following thedollar. There’s a lot of turmoil in the markets.”
Thelargest bloc of Kitco News readers in the online poll were bullish, such as onewho goes by Golden Goose, who commented: “The value ofthe major currencies are about to plummet as never before. Gold and silverespecially will reach prices in fiat currencies which will make previous highsseem laughable.”
Hereis a sampling of thoughts from Kitco Main Street voters on Kitco’s commentingKitco Chat:
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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.