Kitco News Gold Survey: Wall St., Main St. Say Price Gains To Continue
(Kitco News) - Amid the threat of a tradewar breaking between the U.S. and China, Wall Street and Main Street alike lookfor gold prices to continue their rally next week.
The yellow metal rosesharply this week and by late Friday morning was up some $40 from the lows ofTuesday. The first leg higher came when the Federal Reserve did not appear tobe signaling any increase in policymakers’ pace of monetary tightening in 2018.The second came on renewed worries about a trade war, particularly between theU.S. and China.
“Briefly cresting theimportant $1,350 level this morning, the yellow metal made substantial advancesin U.S. dollar price as well as value compared to equities, commodities andmajor currencies,” said Richard Baker, editor of the Eureka Miner Report. “Onlyoil outpaced the lustrous one on a percentage basis.”
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Bullish Bearish Neutral Twenty-one market professionals took part in the weekly Kitco News Wall Streetsurvey. Sixteen respondents, or 76%, called for gold prices to rise over thenext week. Another five voters, or 24%, looked for gold to fall. Nobody calledfor a sideways market.
Meanwhile, 945 voters tookpart in an online Main Street poll. A total of 575 voters, or 61%, saidbullish. Another 281 voters, or 30%, said bearish, while 89, or 9%, wereneutral.
For the trading week nowwinding down, there was not a majority vote in either survey. The largestvoting blocs were 42% bearish for Wall Street and 44% bullish for Main Street.As of 11:02 a.m. EDT, Comex April gold was up 2.7% for the week so far to $1,347.30an ounce.
Charlie Nedoss, seniormarket strategist with LaSalle Futures Group, is among the heavy Wall Streetmajority looking for continued strength in gold, citing potential for moreweakness in the U.S. dollar and worries about a trade war that knocked equitiessharply lower on Thursday.
“We have enoughgeopolitical uncertainty,” Nedoss said. “The market is still talking about thefact the Fed didn’t totally pencil in a fourth rate hike [for 2018].”
Ken Morrison, editor ofthe newsletter Morrison on the Markets, pointed out that new-money inflowsdominated gold this week, as reflected by a 10% rise in the number of openfutures positions during a time when the market was rising. “I expect theuptick in political and economic uncertainty have sufficient tailwinds to pushgold into the $1,360 area,” Morrison said.
However, Morrisoncautioned that the chance that the U.S. administration will “water down”tariffs in the final version may be gold's biggest risk in the near term, somarket participants need to monitor the details in the list of tariffs theadministration promises in 15 days. “The bite may not be as bad as the bark,”Morrison said.
Mark Leibovit, editor ofthe VR Gold Letter, also said higher for gold. “With heavy upside volume comingin on Wednesday, I'm going to give the upside the benefit of the doubt here,but do not want to see the week of March 19 lows broken,” he said.
Among Main Streetparticipants, a Florida-based Kitco reader named Max pointed out that gold isbenefitting from a potential trade war.
“You saw the Dow Jonestank nearly 730 points [Thursday] along with new tariffs on China fromPresident Trump,” he said. “With the uncertainty right now, gold has been, andalways will be, viewed as a safe haven and that’s why the price is up the pastfew days.”
Meanwhile, Baker looks fora pullback even though he also points out that the news flow this week “remindsmarket participants the wisdom of holding a little gold in their portfolios.”
Still, Baker said, “Ithink it likely that some of this safe-haven enthusiasm will wane by next weekas scary headlines transition to more moderate outcomes. Gold will consolidatearound $1,340 and silver should find footing at $16.50 per ounce. In the caseof heightened anxiety, gold may indeed challenge the $1,360 plateau.”
Ralph Preston, principalwith Heritage West Financial, also sees gold prices moving lower, saying thathe looks for the U.S. dollar to begin to strengthen, thus challenging gold’sability to sustain a rally. However, he offers caution about potential buyingon geopolitical news, citing a Financial Times opinion piece stating Israel maybe days away from striking Hezbollah.
By Allen SykoraFor 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.