(Kitco News) - Retail investors and market professionals are conflicted as to where gold prices will be heading in the short-term and during the start of the holiday trading period, according to the latest Kitco News Wall Street vs. Main Street Weekly Gold Survey.
Despite some bargain hunting and technical buying Friday, Comex February gold futures are preparing to end the last full week of trading in slightly negative territory, down 0.72% since Monday. This is the second consecutive negative weekly close for the yellow metal.
According to Kitco’s online survey, retail investors are struggling to find direction for the marketplace in the near term. The results of the survey show one of the narrowest spreads between bullish and bearish sentiment, with the bearish side just eking out the advantage.
This week, 322 people participated in the online survey; of those, 136, or 42%, are bullish prices next week. On the other side, 143 people, or 44%, said they expect are bearish on prices next week and 43 people, or 13%, were neutral on the market.
Last week, 66% of respondents were bearish, which proved to be the most accurate as gold prices struggled this week.
The results of Kitco’s professional survey were similar to the online results as there was no clear majority in sentiment. Out of 36 market experts contacted, 17 responded, of which eight, or 47%, said they expect to see higher prices next week. At the same time, six analysts, or 35%, expect to see lower prices, and three people, or 18%, are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
Last week, sentiment among market professionals was more positive as 50% were bullish on the yellow metal in the previous survey.
Analysts noted that there is still some positive technical price action for gold as the metal, despite falling more than 2% on Thursday, managed to hold above the multi-year low hit earlier in the month.
“The Fed decision didn’t push USD index up through 100 and it didn’t sent gold to $1,000 so both are looking like their trends are changing,” said Colin Cieszynski, senior market strategist at CMC Markets.
Other analysts remain bullish on gold as a contrarian investment since sentiment towards the precious metals has remained so negative. . Ken Morrison, editor of the newsletter Morrison on the Markets, also noted that the other contrarian play is to be U.S. dollar negative, which would also be positive for gold.
“I'm expecting extreme sentiment in each of gold and the dollar combined with a successful test of the December 3 low in gold to team up and provide a tradable rally for gold in the week ahead. I see gold returning to the upper end of the sideways chart pattern at $1075-80 by the end of trading next week,” he said.
On the bearish side, some analysts don’t think that sentiment in the gold market will have enough time to shift as markets face shortened trading weeks between Christmas and New Year.
“In the last two weeks of the year, it’s always all about momentum. The trend for gold is lower and it will continue to be lower. January, however, is the best time of year for gold so there will be an opportunity to buy dips,” said Adam Button, currency strategist at Forex Live.
Dominick Cimaglia, senior dealer at Alliance Financial, said that he also remains bearish on gold as the market was not able to find any traction after the Federal Reserve Open Market Committee (FOMC) meeting.
“Gold rallied in anticipation of a Fed rate hike, but ultimately could not get above 1080. 1080 will now act as a ceiling, with any pop in price being an opportunity to sell. We are now in a rising interest rate environment,” he said.
Wall Street
47%
35%VS
Main Street
42%44%
By Neils Christensen of Kitco News; nchristensen@kitco.com
Follow Neils Christensen @neils_C
