Wall. St. Sees More Weakness In Gold Price; Main St. Leans Bullish
(Kitco News)- Wall Street looks for the recent slide in gold prices tocontinue, while the largest block of Main Street voters is bullish, accordingto the Kitco News weekly survey.
Nineteen market professionals took part in the survey.There were 12 votes, or 63%, calling for gold prices to fall. There were fourvotes, or 21%, calling for gold to rise, while three voters, or 16%, look for asideways market.
Meanwhile, 642 voters responded in an online Main Streetsurvey. A total of 280 respondents, or 44%, predicted that gold prices would behigher in a week. Another 263 voters, or 41%, said gold will fall, while 99, or15%, see a sideways market.
Wall Street
Bullish
Bearish 
Neutral VS
Main Street
Bullish Bearish Neutral For the trading week now winding down, 69% of Wall Streetand 56% of Main Street voters were bullish. Just before 11 a.m. EDT, ComexAugust gold was down 1% for the week so far to $1,242.90 an ounce.
“I remain bearish on gold for next week,” said ColinCieszynski, chief market strategist at SIA Wealth Management. “This is more ofa technical call. It just looks like the U.S. dollar wants to break out whilegold is struggling to hold $1,240.”
Jim Wyckoff, senior technical analyst with Kitco, saidbears are in “solid technical control” of the market. The “path of leastresistance for prices will remain sideways to lower until there is a bullishnear-term technical development to suggest otherwise,” he added.
Adam Button, managing director of ForexLive, also looksfor further weakness in gold prices.
“The U.S. dollar has been relentless and Fed officialsaren’t signaling any sign of slowing down rate hikes,” Button said.“Technically, a break of the December low could start a quick, aggressivesell-off.”
Neil Mellor, senior currency strategist at BNY Mellon, isalso bearish on gold in the near term.
“I think you need to look at gold as a contrary play tothe U.S. dollar,” Mellor said. “If the dollar is heading higher, then gold isgoing lower. Looking at the technicals, it is difficult to be bearish on theU.S. dollar right now.”
Richard Baker, editor of the Eureka Miner Report,described the depreciating Chinese yuan as one of the most “startlingcorrelations” with the foreign-exchange market.
“This relation goes back to the erosion of U.S.-Chinatrade tensions beginning in late March. As the yuan weakens, so does gold,”Baker said. “Interestingly, gold's relation to the yuan is stronger thancorrelation to the U.S. dollar index over this period. If this correlationholds, Comex gold will trend toward the $1,230 level as the yuan approaches 6.7CNY/USD.”
Kevin Grady, president of Phoenix Futures and OptionsLLC, looks for a test of the $1,232 area in gold. There are a number of shorts(bearish traders) in the market, he said, pointing out that the trade war isproviding a safe-haven boost for the U.S. dollar, not gold.
China cannot put tariffs on as many goods as the U.S., hesaid, but could sell U.S. Treasury bonds, which would mean higher interest inthe U.S. “That is a perceived threat to gold,” Grady added.
However, Sean Lusk, director of commercial hedging withWalsh Trading, commented that gold should at some point draw a bid fromconcerns about the escalation of the trade war. However, he added, gold alsohas to hold trendline support around $1,240; the metal dipped below this butthen climbed back above.
“Worries are going to start to come to the forefront asthese tariffs are expanded,” Lusk said, adding that a seasonally strong periodis approaching for gold. Historically, the metal has fared well in late summerand autumn on a pickup of buying from India during the country’s so-called“wedding season.”
Phil Flynn, senior market analyst with at Price FuturesGroup, is among those who anticipate at least a partial recovery in gold. Thereappears to be confidence in the economy, thus “there isn’t a lot of fear in themarketplace” that generally might support gold, he said.
“Having said that, next week we should rebound,” Flynnsaid. “The market is oversold and we are due for some kind of [upward]correction.”
Meanwhile, Mark Leibovit, editor of the VR Gold Letter,commented that cyclical lows often occur due in July, but he is waiting forupside volume to confirm this. Any rally “may only be a dead-cat bounce. Tooearly to tell,” he said.
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.