Wall Street Split On Gold Prices; Main Street Expects Higher

21 August 2016, 07:01
George Georgoudakis

Friday August 19, 2016 11:22

Wall Street

Bullish 37%
Bearish 32%
Neutral 32%


Main Street

Bullish 66%
Bearish 21%
Neutral 13%

Nineteen analysts and traders took part in the Wall Street survey. Seven participants, or 37%, look for gold to be sideways next week. Six each, or 32%, voted higher and the same number voted lower.

Meanwhile, 961 Main Street participants submitted votes in either an online or Twitter survey. A total of 631respondents, or 66%, said they were bullish for the week ahead, while 204, or 21%, were bearish. The neutral votes totaled 126, or 13%.

For the trading week now winding down, 71% of Wall Street respondents and 66% of Main Street participants looked for gold to rise. Both were right. As of 11:06 a.m. EDT, Comex December gold was up by $6.40 for the week so far to $1,349.60 an ounce.

Phil Flynn, senior market analyst with at Price Futures Group, looks for gold to rise despite some of the hawkish comments from Federal Reserve officials that hurt gold this week.

“My sense is the Fed isn’t going to be able to raise rates this year,” Flynn said. “One of the problems they have is the lack of inflation, even though the jobs numbers are getting better….At the end of the day, my sense is the (gold) market is going to rebound next week on increased expectations that the Fed won’t be able to act and the U.S. dollar will continue its downtrend next week.”

Ira Epstein, director of the Ira Epstein division of Linn & Associates, also looks for gold to move higher “as the U.S. dollar seems headed lower.”

However, Charlie Nedoss, senior market strategist with LaSalle Futures Group, looks for gold to pull back after some of the comments from Federal Reserve officials lately suggesting possible higher rates in the wake of a strong U.S. jobs report released earlier this month. “It seems like a lot of the discourse has changed,” he said. He added that he doubts the Fed will hike any time soon, but commented that officials are nevertheless jawboning the market.

“That gold has traded sideways over the past two weeks when the dollar
declined 2% is indicative of the headwinds facing gold,” said an e-mail from Ken Morrison, editor of the newsletter Morrison on the Markets. “Stable financial markets and the ever-present jawboning of the FOMC members reminding us maybe just maybe it's time to hike rates will keep gold on edge. My scenario has gold breaking trendline support @ $1,340, extending from the July 25 low then declining to $1,320 in the week ahead.”

Kevin Grady, president of Phoenix Futures and Options LLC, looks for sideways trading after some of the recent Fed comments hinting at the chance of a rate hike.

“A lot of the Fed governors this week were trying to talk up the potential for an interest-rate hike in September,” Grady said. “A lot of people are going to be waiting for the (August) nonfarm payrolls numbers. You are going to see some short-term shorting (opening bearish positions) in anticipation of a rate hike. So I think it’s going to be neutral.”

Bob Haberkorn, senior commodities broker with RJO Futures, looks for gold to be largely range-bound ahead of a speech next Friday by Fed Chair Janet Yellen’s at policymakers’ annual Jackson Hole economic symposium.

“The sentiment overall is still bullish,” Haberkorn said. “But I think you’re going to see sideways because Friday you do have a pretty anticipated speech coming from Yellen at Jackson Hole. We’ll be range-bound, waiting to see what she says.”

George G, managing director with RBC Wealth Management, looks for “volatility and a continued trading range” ahead of Yellen.

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