Supermajority of Wall Street and Main Street see gold challenging all-time highs next week
NEW YORK (January 26) The gold market enjoyed one of its strongest and steadiest performances in months this week as markets digested the daily shocks and uncertainties provoked by the new U.S. administration.
Spot gold kicked off the week trading above the $2,700-per-ounce level, but it saw a brief sell-off to test resistance at $2,690 by 8:00 p.m. Eastern Sunday evening. This proved to be the weekly low, however, as the yellow metal never sniffed the $2,600s again.
Monday's trading was relatively stable, with gold prices trending in a narrow range between $2,704 and $2,712 per ounce through President Donald Trump's inauguration and initial flurry of executive orders. Of course, Monday was also a federal holiday in the United States, which kept a lid on some of the potential market volatility.
After a final retest of $2,704 shortly after 7:45 p.m. Eastern, gold saw its first sharp increase of the week, gaining over $20 by 9:30 p.m., and topping out just shy of $2,732 per ounce by 2:30 a.m. Tuesday morning.
By the time of the North American market open on Tuesday, gold was already within a dollar of the weekly high, and when American traders joined the fray, they immediately pushed the yellow metal to fresh highs above $2,745 per ounce by noon Eastern. Before midnight, spot gold had broken through $2,750 per ounce, and by 5:15 a.m. on Wednesday, the yellow metal had marked a double-top above $2,762, a level which would serve as the weekly high for the following two days.
Wednesday and Thursday saw precious metals markets consolidate at their new highs as traders attempted to gauge gold's potential to challenge the all-time highs from late October. With no sign of weakness on offer and plenty to support safe-haven purchasing, the yellow middle ultimately broke through the $2,762 per ounce level just before 9:00 p.m. Thursday evening, rocketing up to $2,775 by 10:00 p.m.
Friday's trading session established the $2,772 area as an effective near-term floor for the yellow metal, with spot gold topping out at $2,786 per ounce shortly after 10:15 a.m. Eastern, before retreating back to the low $2,770s for the duration of the session.
The latest Kitco News Weekly Gold Survey showed industry experts as bullish as they’ve ever been on the yellow metal, while retail traders also showed renewed confidence in gold’s ability to reestablish record-high prices.
Adam Button, head of currency strategy at Forexlive.com, is adopting a neutral stance for the coming week. “I think the tariff threat is overstated and that’s keeping a safe-haven bid in the market,” he said. “Lunar New Year also stalls the season rally.”
“Up,” said Adrian Day, president of Adrian Day Asset Management. “The momentum is certainly with gold, even as North American investors continue to sell. We could see new all-time highs in USD even as gold has already broken out in the currencies of the main buyers, from China to Turkey.”
Darin Newsom, senior market analyst at Barchart.com, sees little standing in the way of fresh highs for the yellow metal as global markets continue to react to the unpredictability of the new U.S. President.
“We can throw out technical and fundamental analysis at this point,” he said. “Gold is a safe-haven market against the chaos associated with the new US administration. There is no telling what the next statement or action will be.”
“At some point, markets will relearn the lesson from 4 to 8 years ago and ignore most everything that is said,” Newsom added. “But algorithms aren’t there yet.”
Rich Checkan, president and COO of Asset Strategies International, thinks gold is due for a near-term retracement.
“Although I am certain of gold’s long-term trend being higher as measured in mismanaged fiat currencies, the short-term belief for next week is a pullback after today’s surge to near new all-time highs,” he said. “Couple today’s surge with next week’s uncertainty surrounding the Federal Open Market Committee meeting, and I see gold succumbing to a bit of profit-taking.”
This week, 10 analysts participated in the Kitco News Gold Survey, with the strongest majority in months predicting higher gold prices in the coming days. Eight experts, or 80%, expect to see gold prices climb higher during the week ahead, while only one analyst, or 10%, predicted a price decline for the precious metal, and another expected near-term consolidation for the yellow metal.
Meanwhile, 169 votes were cast in Kitco’s online poll, with Main Street investors also very bullish, though less so than the experts. 118 retail traders, or 70%, looked for gold prices to rise next week, while another 25, or 15%, expected the yellow metal to trade lower. The remaining 26 investors, representing 15% of the total, predicted gold would trend sideways in the near term.
Next week’s economic calendar will be dominated by the world’s central banks, with the U.S. Federal Reserve and Bank of Canada announcing their interest rate decisions on Wednesday, followed by the European Central Bank announcement on Thursday.
Markets will also pay attention to the Monday release of new home sales for December, the durable goods and consumer confidence reports on Tuesday, U.S. Q4 GDP, weekly jobless claims, and pending home sales on Thursday, and the Friday morning release of the U.S. PCE Index and personal income and spending.
“I still like gold higher,” said Marc Chandler, managing director at Bannockburn Global Forex. “New record is likely as USD corrects lower. Trump’s economic nationalism may also encourage some central banks to accumulate gold.”
“Next week, ECB, Bank of Canada, and probably Sweden’s Riksbank cut rates, while Fed stands pat,” Chandler added. “Still, much good news has been discounted in the Dollar Index’s 10% gain since the end of September.”
“I am bullish here,” said Michael Moor, Founder of Moor Analytics. “In a higher time frame, we are still in an overall bull trend from November 2015, and likely in the later stages. Part of this is a prediction I made of $151 minimum, $954 (+) maximum from $2,148.4 - of which we have attained $653.4 so far. This is OFF HOLD.”
“On a lower time frame, the trade above 27041 (-.6 of a tic per/hour) has brought in $90.7 of strength,” he noted. “The trade above 27247 (-0.6 of a tic per/hour) now projects this upward $55 minimum, $235 (+) maximum — we have attained $70.1.”
Moor warned, however, that he believes “we are likely in yet another 'last stretch' of the move up from 25967, with areas of possible exhaustion at 28103, and higher. A decent break back below 27852 (+2 tics per/hour starting at 12:20 pm) will warn of decent pressure. A 'decent' penetration today is $9.8.”
And Kitco Senior Analyst Jim Wyckoff believes gold prices can set new all-time highs next week. “Charts are bullish, and risk aversion is keener as the marketplace awaits potentially disruptive policy actions from Trump administration,” he said.
At the time of writing, spot gold last traded at $2,771.18 per ounce for a gain of 0.60% on the day and 2.52% on the week.
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