Wall St. Flips To Bearish On Gold; Main St. Still Bullish
(Kitco News)- Wall Street changed its near-term outlook on gold pricesand now looks for the metal to continue to decline on an expectation for moreU.S. rate hikes, although Main Street still leans bullish, according to theweekly Kitco News gold survey.
The Federal Open Market Committee wrapped up a meeting Thursdayin which policymakers issued a statement saying economic activity remains“strong” and suggested “further gradual increases” in interest rates. Thistends to underpin the dollar, and gold more often than not moves in theopposite direction from the U.S. currency.
“It’s not a coincidence that gold is down sharply the dayafter the Federal Reserve said it will continue to raise interest rates,” saidDavid Madden, market analyst at CMC Markets.
Twenty market professionals took part in the Wall Streetsurvey. Twelve respondents, or 60%, predicted lower prices by next Friday.There were four votes each, or 20%, for higher and sideways.
Meanwhile, 370 people responded to an online Main Streetpoll. A total of 178 respondents, or 48%, called for gold to rise. Another 109,or 29%, predicted gold would fall. The remaining 83 voters, or 22%, see asideways market.
Wall Street
Bullish
Bearish 
Neutral VS
Main Street
Bullish Bearish Neutral For the trading week now winding down, 53% of Wall Streetand 57% of Main Street voters were bullish. As of 11 a.m. EDT, Comex Decembergold was 1.6% lower for the week so far at $1,213 an ounce.
“I am bearish for next week,” said Kevin Grady, presidentof Phoenix Futures and Options. “Gold is having a hard time holding onto itsgains at these levels. We are not seeing many new longs entering the market atthis price point, so I think we should test the 50 DMA [50-day moving average),which is $1,213.60. A breach of that level will attract more selling.”
Bob Haberkorn, senior commodities broker with RJOFutures, pointed out that gold is on the defensive so far Friday after the FOMCremained hawkish in its post-meeting statement Thursday.
“I see that continuing into next week,” he said, addingthat a break below $1,200 could occur.
Phil Flynn, senior market analyst with at Price FuturesGroup, also sees gold-price weakness mainly due to higher rates.
“It seems like gold’s main concern is rising interestrates and the strong dollar,” Flynn said. “So it looks like there will be moretechnical weakness that will continue into next week.”
Further, he added, the slowdown in China’s economy willpressure the country’s currency and underpin the dollar, thereby meaning a“difficult time” for gold.
Charlie Nedoss, senior market strategist with LaSalle FuturesGroup, anticipates a possible test of $1,200 an ounce on the downside, with thepotential to trigger sell stops. These are pre-placed orders hit when certainchart points are hit. He points out that the dollar is showing technicalstrength, topping the 20-day moving average again, as it feeds of off FOMCstatements.
“The stars just aren’t lining up for gold right now asenergy prices fall and the Fed continues to raise interest rates,” said ColinCieszynski, chief market strategist, SIA Wealth Management. “Gold is losingmomentum, and it just looks like the price wants to roll over.”
Richard Baker, editor of the Eureka Miner Report, alsosees more weakness.
“The likelihood that the Federal Reserve will raise ratesin December is now high,” Baker said. “The yellow metal's recent return tosafe-haven mode may have run its course following the divided governmentoutcome of the midterm elections. Gold is also feeling the gravity of fallingcommodities, especially oil and to a lesser extent copper.”
Meanwhile, Adrian Day, chairman and chief executiveofficer of Adrian Day Asset Management, is among those who see prices rising.
“As Democrats make clear they intend to investigate ‘allthings Trump,’ the dollar will slip and gold inch up,” he said.
George Gero, managing director with RBC WealthManagement, suggested the Friday weakness and new shorts, or bearish trades,“could give way [in the] next two weeks to rally.” Increased shorts mean apotential for short covering as traders buy to exit those traders.
Jim Wyckoff, senior technical analyst with Kitco, seesgold steady but choppy in the week ahead. “Bulls have lost some near-termtechnical strength this week,” Wyckoff added.
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.  |