Main St. Overwhelmingly Bearish On Gold; Wall St. Bullish
(Kitco News)- Main Street may be morebearish than ever on the direction of gold prices in the next week, while WallStreet leans bullish, based on the weekly Kitco News gold survey.
Over the years, MainStreet has tended to be mostly bullish on the metal. However, retail investorshave called gold to be lower in three of the last four weeks, and perhaps neverby as large of a percentage as this week.
A total of 2,411 votersresponded in a Main Street survey. Of these, 1,796 respondents, or 74%,predicted that gold prices will be lower in a week. Another 414 voters, or 19%,said gold will rise, while 150, or 6%, see a sideways market.
Respondents who voted inthe Twitter portion of the Main Street poll were slightly bullish, however.Twitter voters leaned bullish by 45% to 41%, although this sampling (114 votes)was far smaller than the online poll.
Meanwhile, 14 marketprofessionals took part in the Wall Street survey. Eight respondents, or 57%,called for higher prices, while five, or 36%, said lower. One respondent, or7%, predicted a sideways market.
Wall Street
Bullish
Bearish 
Neutral VS
Main Street
Bullish Bearish Neutral For the trading week nowwinding down, 67% of Wall Street voters and 45% of those on Main Street werebullish. Around 11 a.m. EDT, Comex December gold was down 2.7% for the week sofar to $1,186 an ounce.
Ken Morrison, editor ofthe newsletter Morrison on the Markets, is among the Wall Street majority whofigures gold is due for a bounce.
“Gold enters next weekwith an ideal set-up for a counter-trend rally,” Morrison said. “Bullishsentiment has touched 6% this week, the lowest level since December 2016. Incontrast, sentiment in the dollar index [is] at 96%, the highest over the sameperiod. Add to the sentiment extremes record net-short [position in] futuresheld by managed money and gold is set up for a recovery to $1,200-$1,210 nextweek.”
Ralph Preston, principalwith Heritage West Financial, said he looks for a bounce off of $1,180 supportas the Turkish lira crisis subsides for at least a short time.
Jim Wyckoff, seniortechnical analyst with Kitco Metals, sees steady to higher prices. “The bearsappear to be exhausted on the downside,” he says.
Phil Flynn, senior marketanalyst with at Price Futures Group, also sees potential for a recovery,commenting that the U.S. dollar should ease if international trade talks go well.
“We should get a rebound[in gold],” he said. “Hedge fund are shorter [more bearish] than they ever havebeen in history and added to their shorts eight weeks in a row. That type ofbearishness is unprecedented.”
Meanwhile, Bob Haberkorn,senior commodities broker with RJO Futures, said he sees more downside, butadded that it should be limited. In particular, markets are factoring inanother expected Federal Reserve rate hike next month, he said.
“We’re looking at two morerate hikes for the rest of the year,” Haberkorn explained. “I think it’s goingto be hard for gold this week to year-end to hold rallies.”
Kevin Grady, president ofPhoenix Futures and Options LLC, said he remains bearish but also cited onepotential upside catalyst.
“I am looking for gold totest the $1,150 level,” Grady said. “I do, however think that traders need tokeep a close eye on the U.S. dollar. The Trump administration cannot be happywith the strong dollar, and I would expect the president to try to talk thedollar down prior to any formal intervention. There are a large amount ofshorts in gold and any news-driven short covering will be violent.”
Colin Cieszynski, chiefmarket strategist at SIA Wealth Management, described offsetting factors.
“I am neutral on gold forthis week,” he said. “The breakdown below $1,200/oz was a big bearish signaland I remain bearish on gold in the medium term. In addition to the rising U.S. dollar, negative sentimenttoward China and a weakening Chinese economy could potentially cut into thedemand for physical gold. On the other hand, for the short term, $1,160 hasemerged as support and the weekly RSI [Relative Strength Index] on gold is themost oversold it has been in over five years. So I think gold could bounce backover the next week or two but it could struggle to regain $1,200.”
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.