Wall Street and Main Street alike look for gold prices to rise this week even though the Federal Open Market Committee is widely expected to hike U.S. interest rates again, based on the Kitco News weekly survey.
But then, some observers pointed out: traders have already factored higher U.S. rates into markets.
Investors have many major news events to monitor this week, with perhaps the most important being the Fed meeting, with policymakers expected to hike interest rates another 25 basis points. Other events include a U.S.-North Korea summit and meeting of the European Central Bank.
Seventeen market professionals took part in the survey. There were 10 votes, or 59%, calling for gold prices to rise. There were four votes or 24%, calling for gold to fall, while three voters, or 18%, look for a sideways market.
Meanwhile, 830 voters responded in an online Main Street survey. A total of 505 respondents, or 61%, predicted that gold prices would be higher in a week. Another 223 voters, or 27%, said gold will fall, while 102, or 12%, see a sideways market.
Charlie Nedoss, senior market strategist with LaSalle Futures Group, looks for a down-and-up week, with the precious metal ultimately finishing higher than where it leaves off last week. He looks for the usual “knee-jerk” market reactions around the Fed meeting but adds that policymakers typically have telegraphed their intentions ahead of time. Any price break lower may end up as a buying opportunity, he added.
“We’re at a key point,” Nedoss said. “We’re sitting right on the 10-day and 20-day moving averages….I look for weakness into the Fed, but after the Fed, I’m looking for support.”
George Gero, managing director with RBC Wealth Management, figures gold may rally since a Fed rate hike is already factored into prices, thus the dollar may weaken.
“The rate hike is priced in. Most of the negatives are priced in,” Gero said. “It’s all about the U.S. dollar.”
Jim Wyckoff, senior technical analyst with Kitco, who sees steady to higher prices, commented that a “price downtrend on the daily chart has been negated this week.”
Meanwhile, Ralph Preston, principal with Heritage West Financial, looks for gold to fall due to a muscular U.S. currency.
“Gold’s recent price action is like watching paint dry – boring,” Preston said. “As mentioned before, we may see a pop higher on a geopolitical event. However, I do not see prices holding onto any significant gains in the face of a strengthening U.S. dollar.”
Colin Cieszynski, chief market strategist at SIA Wealth Management, is also bearish on gold prices for this week.
“The U.S. dollar continues to climb heading into the Fed meeting later this month where the FOMC is expected to raise interest rates again,” he said. “Meanwhile, it looks like [U.S. President Donald] Trump’s summit with [North Korean leader] Kim Jong Un is on, which could ease political tensions in Asia. The addition of a headwind from the dollar and the removal of a tailwind from political risk could keep gold on the back foot in the coming days.”
Source: Kitco News