For the first time this year, there is a sharp divergence between Wall Street and Main Street.
The majority of traders and analysts who make up the Wall Street poll for Kitco look for the yellow metal to remain on the defensive next week, while Kitco readers who take part in an online poll look for gold to bounce. Previously, both camps were bullish in each poll so far in 2018.
Gold is heading for a loss on the week, falling sharply Friday after the U.S. Labor Department reported a stronger-than-forecast 200,000 rise in January non-farm payrolls. Further, the report showed wages continuing to rise, seen as a sign of building inflation. Hourly earnings increased 0.3% in January after a 0.4% rise in December. The data enabled the U.S. dollar to rise, thereby pressuring gold.
Seventeen market professionals took part in the Wall Street survey. Eleven, or 65%, called for gold to fall. There were three votes each, or 18%, calling for higher and sideways prices.
Meanwhile, 1,060 votes were cast in an online Main Street poll. A total of 676 voters, or 64%, looked for gold to climb next week. Another 238, or 22%, said lower, while 146, or 14%, were neutral.
For the trading week now winding down, 52% of Wall Street voters and 62% of Main Street voters were bullish.
Not counting the current week, Wall Street and Main Street are both 2-1 so far in 2018. For the year 2017, Main Street was right 31 of 50 times for a winning percentage of 62%.Wall Street forecasters collectively were right 30 of 51 times for 59%. (There were two weeks without a Main Street poll and one week without a Wall Street poll).
Robin Bhar, metals analyst at Societe Generale, is among the Wall Street majority seeing lower prices in the week ahead, citing potential for a recovery in the recently soft U.S. dollar.
"There will still be some ramifications from Friday's strong jobs number reported in the U.S., where we see inflationary pressures building," he said. "That could make the FOMC more hawkish than they are now."
A large number of traders still hold bullish positions in gold, meaning there is potential for more of a correction lower, said Kevin Grady, president of Phoenix Futures and Options LLC, and Sean Lusk, director of commercial hedging with Walsh Trading.
"They [Federal Reserve policymakers] are going to be raising rates in March," Grady said. "The higher rates at some point should start putting pressure on gold."
Added Lusk: "The market is a little susceptible to some back-and-fill. We'll see how the dollar does."
Ole Hansen, head of commodity strategy at Saxo Bank, said that he is cautiously bearish on gold next week.
"I am in correction mode right now so prices could go lower," he said. "But I don't see a collapse in gold. When the dust settles, there are still underlying reasons to own gold."
Richard Baker, editor of the Eureka Miner Report, also sees more weakness in the aftermath of the employment data.
"The better-than-expected jobs report this morning accelerated the 10-year Treasury above 2.8% and rebounded the U.S. dollar off three-year lows -- both bearish headwinds for gold," Baker said. "However, a solid uptick in average hourly wages and steady advance of broader commodity indexes to multi-year levels suggest inflation is in the air -- a bullish counterbalance to rising interest rates and a potentially more hawkish U.S. Federal Reserve in 2018. For the near term, I believe the forces on gold price are net bearish, resulting in a retreat to the $1,320-level by next week."
Phil Flynn, senior market analyst with at Price Futures Group, looks for gold to start slow but recover to finish next week higher than where it leaves off this week.
"We've been in a weak-dollar environment even with the expectation the Fed is going to raise rates," he said. "With the strong jobs number, we may start the week in gold weak....We think the gold market will rebound as we go into the week on inflation worries."
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, is among those who look for gold to be sideways.
"A consolidation of the recent gains is overdue, and without a new stimulus for gold to move higher, it will likely consolidate," Day said. "Much depends on the dollar, of course."
Jim Wyckoff, senior technical analyst with Kitco, sees gold "sideways and choppy," adding that "technicals have deteriorated a bit this week."
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