Continued Positive Sentiment Points To Further Gains In Gold Prices: Kitco Gold Survey

Friday February 12, 2016

(Kitco News) - Sentiment in the gold market remains strong  after prices hit a one-year high in a parabolic move and the majority of people surveyed  expecting more gains in the near-term, according to this week’s Kitco News Wall Street vs. Main Street Gold Survey.

Gold is preparing to end its third positive consecutive week, with gains of more than 5.3%, the biggest weekly percentage gain since late October 2011.

Analysts have noted that the yellow metal’s push back above $1,200 an ounce, generated a lot of attention and positive sentiment among fearful investors looking for a safe-haven. Strong positive sentiment is confirmed in Kitco’s weekly survey, which continues to attract record participation.

This week, the online survey brought in 1,953 votes, of which 1,678 participants, or 86%, said they are bullish on gold next week. This is the second week the survey has hit that level and is the fourth straight week it has been above 80%. At the same time, 177 people, or 9%, said they are bearish on gold next week and 98 people, or 5%, are neutral.

Although the spread is much narrower, a majority of market analysts also expect gold prices to move higher in the near-term. Out of 34 market experts contacted, 17 responded, of which nine, or 53%, said they expect to see higher prices next week. At the same time seven professionals, or 41%, said they see lower prices and one analyst was neutral on the market. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

Many analysts are bullish on gold, expecting sentiment to continue to grow as prices have broken through key technical barriers, culminating in a weekly high at $1,263.90 an ounce.

“Sentiment towards gold has changed dramatically, and gold has even moved up on some days in the face of a dollar or stock market rally. With a change in sentiment, those underweight or waiting on the sidelines will start buying and this will fuel gold’s rally for a little longer,” said Adrian Day, president of Adrian Day Asset Management.

While analysts are positive on the gold market, they are not ruling out some weakness at the start of the week.

Phillip Streible, senior market analyst for RJO Futures, said that he remains bullish on gold as prices remain above $1,230 an ounce, a level that he said is an important pivot point, representing a 50% retracement from Thursday’s considerable rally.

“We could see some profit taking early in the week but the gold engines will only rev up again. The problems we have seen that sparked this rally can’t be fixed overnight,” he said.

Bill Baruch, senior commodity broker at iiTrader, agreed that $1,230 will be an important support level to watch; however, he added that he is still a buyer of gold as prices remain above $1,200 an ounce.

“The market does seem a little over done but that doesn’t mean we can’t see another push,” he said.

On the negative side, analysts say they expect to see lower prices next week on a technical move, explaining that the market needs to consolidate after its recent parabolic drive.

“I just think [gold] shot up way too fast, the chart looks parabolic and is way overbought. [The market] is due for a correction. I also think [gold] will hold $1,200 and continue to trend higher over the longer term as the [US dollar] retreats,” said Colin Cieszynski, senior market strategist at CMC Markets.

Wall Street

Bullish53%

Bearish41%

Neutral6%

VS

Main Street

Bullish86%

Bearish9%

Neutral5%

By Neils Christensen