(Kitco News) - Friday morning George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures, said in a media note that the gold bears are leaving the woods, which appears to be an accurate assessment of market sentiment according to the latest weekly Kitco News Wall Street vs. Main Street Gold Survey.

Among the market professionals surveyed by Kitco News, only one person is expecting to see lower prices next week.

Looking at the gold market, prices are preparing to end the week in positive territory, capping a three-week losing streak. At the start of Friday’s trading session, Comex December gold future hit a high of $1,141.50 an ounce, its highest price since Aug. 2. As of 12:10 p.m., gold was trading at $1,138 an ounce, up 1.88% on the day..

Looking ahead, gold prices could move higher as sentiment among retail investors has improved, with a clear majority expecting to see higher prices next week. This week 172 people participated in Kitco’s online survey. Of those 98, or 57%, are bullish on gold next week; 49 respondents, or 28%, are bearish; and 25 people, or 15%, are neutral.

Kitco’s market professional survey was even more definitive; out of 35 market experts contacted, 20 responded, of which 15, or 75%, said they expect to see higher prices next week. At the same time, four professionals, or 20%, are neutral on gold, and one person, or 5%, sees lower prices. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

According to most comments, the shift in gold’s sentiment is the result of the Federal Reserve leaving interest rates unchanged Thursday and spooking markets by highlighting the risk of growing global uncertainty on the U.S. economic recovery.

The only analyst in the bear camp this week is Richard Baker, editor of the Eureka Miner. Despite the Fed’s monetary policy decision, he said that he thinks gold’s high for September is in place and is expecting prices to fall back to $1,120 an ounce.

Although most analysts are bullish on prices in the near term, it is interesting to note that many have quantified their outlook, saying that the rally could be limited as the Fed has still left the door open to a rate hike, as early as October.

Fed Chair Janet Yellen said, during her press conference following the central bank’s monetary policy meeting, that the majority of the committee still sees higher interest rates later in the year. According to the central bank’s projections, the committee’s average for the Federal-funds rate by the end of 2015 is at 0.40%.

Yellen added that there was an argument to be made for raising rates in September; however, because of the global weakness and fragile financial market, the committee decided to err on the side of caution and leave rates unchanged.

A lot of analysts are looking for gold prices to reach $1,150 an ounce, before there is an increase in selling pressure. Others are looking for prices to reach the August high of $1,170 an ounce before the rally is capped.

“It is still too early to say if we have seen gold’s bottom,” said Ole Hansen, head of global strategy at Saxo Bank. “I think $1,170 is going to be the key level to watch next week.”

Nic Erxarhos, senior economist at CIBC World Markets, said that the Fed is still closer to a rate hike, whether it happens in December or early 2016, compared to other central banks and that will continues to support the U.S. dollar, capping any advances in gold.

“Gold has room to move a little higher,” he said. “But ultimately we believe that the U.S. dollar will remain relatively strong moving forward.”

Wall Street

Bullish75%

Bearish5%

Neutral20%

VS

Main Street

Bullish57%

Bearish28%

Neutral15%

By Neils Christensen of Kitco News; nchristensen@kitco.com
Follow Neils Christensen @neils_C

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