Main Street Strongly Bearish On Gold Next Week, Wall Street Mildly

Author: Paul Ploumis
08 Jun 2015 Last updated at 07:32:01 GMT
(Kitco News) - Gold’s inability to hold earlier gains above $1,200 an ounce and a stronger than expected employment report is creating some strong pessimism in the marketplace as a strong majority of regular investors see lower prices next week.

Comex August gold futures are preparing to end its third consecutive week in negative territory and according to the Kitco Wall Street Versus Main Street Weekly Gold Survey, that trend is not expected to end next week.

This week, 350 people participated in Kitco’s online survey, of those, 211, or 60% are bearish on gold next week; 106 or 30% are bull on prices next week and 33 voters or 10% are neutral.

The results of the Wall Street survey were a lot closer, ending in a statistical tie with a slight bias to the downside. Out of 33 market experts contacted, 19 responded; of those, nine participants, or 47%, see lower prices, eight experts, or 42%, see lower prices and two, or 11%, are neutral on the gold market. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

Last week both Wall Street and Main Street proved to be wrong in their outlook, expecting that gold would end this week higher.

In response to the online survey, Sam, from Evansville, IN, said that although he is bullish on gold in the long term, he is expecting to see lower prices next week. He added that the Fed has no choice but to eventually hike rates, a negative for gold.

"Those on fixed investment incomes have been hurt badly by low interest rates and that has slowed domestic spending. And, there are concerns the stock market is getting overvalued and the Fed is being blamed for a bubble in stocks,” he said in an email.

Another Kitco reader, Yash, from India, who was also bearish last week, said that he remains bearish on gold in the near-term. He added that he is negative because of positive U.S. economic data and low physical demand in India and China. He said that gold can’t push above $1,190 until the after the June Federal Open Market Committee (FOCM) meeting.

Colin Cieszynski, senior market strategist at CMC Markets, said that he is bearish on gold in the near-term because of a stronger U.S. dollar, which found some new momentum Friday after government data said 280,000 jobs were created in May.

"Gold has staged a major technical breakdown taking out $1,170 and we could see more follow through on that next week,” he said.

Cieszynski added that lower political risks in Europe will also reduce gold’s safe-haven allure.

Adam Button, currency strategist at Forexlive.com is also negative on gold next week because of a stronger U.S. dollar. He said that new leg in the greenback’s rally could push gold prices toward $1,145 an ounce.

Not all market professionals are negative on the gold market, Adrian Day, president of Adrian Day Asset Management said that equity markets appear to be over-bought and a potential correction next week could benefit the gold market.

Courtesy: Kitco News