Allen Sykora  

Friday June 02, 2017 11:58

(Kitco News) - Traders and analysts look for gold to maintain its post-payrolls momentum into next week, based on the weekly Kitco News gold survey.

Market participants suggested a soft report on nonfarm payrolls Friday may mean less monetary tightening by the Federal Reserve later in the year. They also cited continuing political uncertainties as a supportive factor for gold, as well as technical-chart momentum as the precious metal hit its highest price in more than a month.

Twenty traders and analysts took part in a weekly Kitco News Wall Street survey. Sixteen voters, or 80%, see gold prices rising by next Friday.  None said lower, while four voters, or 20%, were either neutral or expected sideways prices.

Due to a technical issue, there was no online Main Street survey this week, although Kitco News expects this to resume next week.

In last Friday's survey for the current week, 72% of Wall Street voters and 62% of Main Street voters were bullish. As of 11:45 a.m. EDT Friday, Comex August gold was 0.73% higher for the week so far, last trading at $1, 280.80  per ounce.

So far in 2017 but not counting the current week, Wall Street forecasters collectively were right 13 of 20 times for a winning percentage of 65%. Main Street was 12-8 for 60%.

“I think gold is going to continue to be up for a little while,” said Daniel Pavilonis, senior commodities broker with RJO Futures. “This number was bad for the dollar and we (gold) will move up now.”

Pavilonis was referring to the smaller-than-forecast rise of 138,000 nonfarm payroll jobs in the U.S. during May. Expectations had been for around 181,000 to 185,000 new jobs.George Gero, managing director with RBC Wealth Management, also looks for gold to rise, explaining that while markets have already factored in a Federal Reserve rate hike for this month, the jobs report now creates doubts about how aggressive policymakers may tighten later in the year.

Further, “it looks to me like there are enough political worries to keep a bid under gold,” Gero added, in particular mentioning June 8 congressional testimony from James Comey, the former FBI director who was fired by U.S. President Donald Trump. 

Colin Cieszynski, chief market analyst in Canada for CMC Markets, echoed Gero’s views.

“I am bullish on gold for next week,” Cieszynski said. “Soft U.S. payrolls and trade data has USD [U.S. dollar] on its heels. Even though the Fed is still likely to raise rates this month, that could be the last one for a while. Next week there’s more political risk brewing between the U.K. election and Comey speaking to Congress.”

Afshin Nabavi, head of trading at trading house MKS (Switzerland) SA, described the precious metals as “very strong” at the moment. “It looks like $1,300 is around the corner,” he said.

Meanwhile, Kevin Grady, president of Phoenix Futures and Options, described himself as neutral for next week, expressing doubt that gold will maintain the upside momentum from the immediate aftermath of the payrolls report. He cited continuing expectations that the Federal Reserve will hike U.S. interest rates when policymakers meet in the middle of the month.

“I’m not bearish on gold,” he said. “I’m not bullish. It’s not like I want to be short looking for lower prices.”