Retail Investors Turn Bullish On Gold; Wall Street Remains Mixed

By Paul Ploumis 13 Jul 2015 Last updated at 04:08:49 GMT

(Kitco News) - A five-week bearish trend in the gold market has come to a halt as a majority of retail investors have now turned bullish on the yellow metal; however, market professionals remain mixed, according to the results of this week Kitco News Wall Street vs Main Street Weekly Gold Survey.

The shift in the short-term outlook among retail investors came as gold managed to hold near-term support around $1,150 an ounce after it was dragged lower by broad-based selling throughout the commodities market at the start of the week.

This week, 538 people participated in Kitco News’ online survey. Of those, 289 participants, or 54%, expect to see higher gold prices next week; 200 participants, or 37%, see lower gold prices and 49 people, or 9%, are neutral.

Despite the renewed optimism among retail investors, the results among market professionals remained mixed for the fourth straight week. Out of 33 market experts contacted, 20 responded; of which eight, or 40%, said they are bullish on gold next week. At the same time, seven professionals, or 35% said they are also bearish, and five people, or 25%, are neutral on gold. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

Once again, last week’s retail investor outlook proved to be the most accurate as 56% of participants in the online survey expected gold to end this week in negative territory.

Looking ahead, a few of the analysts are bearish on gold because of its inability to attract safe-haven flows. A few think it is only a matter of time before the yellow metal retests its long-term lows of $1,142 an ounce.

“If a market meltdown in China, crashing commodities and a flow into defensive havens this week wasn’t enough to send gold rocketing higher, I have a hard time seeing what may keep it afloat if tensions ease and capital continues to flow back out of safe havens,” said Colin Cieszynski, senior market analyst at CMC Markets.

Ken Morrison, editor of the newsletter Morrison on the Markets, agreed that gold’s inability to rally in an extreme scenario does not bode well for prices. He added that managed-money funds have been aggressively adding new short positions in gold.

“The week ahead will probably see $1150 support give way to lower prices,” he said.

However, analysts in the bullish camp say that gold’s ability to hold the $1,150 level during this week’s selloff could be a bullish signal for the market.

“There is still more room to the downside but a price that won’t break support levels should start to push higher,” said Sean Lusk, director commercial hedging division at Walsh Trading.

Some analysts also pointed out the technical side of this oversold marketplace, which suggests some buying next week.

“The market is overdone on the downside, technically. And, I think risk aversion will be keener in the market place next week,” said Jim Wyckoff, senior technical analyst.

Courtesy: Kitco News