Kitco survey: coronavirus hangs over gold bulls next week

Kitco News’ weekly gold survey, released on Friday, showed respondents were still bullish on next week’s gold price. Traders and analysts said they were still concerned about the economic impact of the coronavirus in China, with a small number of cases spreading to other countries.

“I think we’re going to see continued concern about the coronavirus,” said Phil Flynn, senior market analyst at Price Futures Group in New York.

Against this backdrop, gold demand tends to rebound, several respondents said.

“I think there’s definitely demand right now because [the number of infections and deaths] is increasing every day,” said Kevin Grady, President of Phoenix Futures and Options LLC.

Seventeen market professionals took part in the survey of Wall Street. Fourteen professionals, or 82%, expect gold prices to rise. Only three professionals, or 18 percent, expect gold prices to fall and none expect the market to move sideways.

Meanwhile, in an online poll of ordinary investors, 995 people voted. A total of 687 ordinary investors, or 69%, expect gold prices to rise next week. Another 163, or 16 percent, thought gold prices would fall, with the remaining 145, or 15 percent, neutral.

Last week’s survey showed that 59 percent of Wall Street professionals and 67 percent of ordinary investors were optimistic about gold.

Spot gold closed up $14.68, or 0.93 percent, at $1588.70 an ounce after touching the $1590 mark late in the session. Gold is up 4.73 percent this month, on track for its biggest gain since August. COMEX gold for April delivery closed down $1.30, or 0.08 percent, at $1,587.90 an ounce.

“I think coronavirus risk will continue to be central for some time, so gold is expected to re-test the $1,600 – $1,610 area, which peaked earlier this month during the Middle East crisis, at some point in the next few days,” said Colin Cieszynski, chief market strategist at SIA Wealth Management. “Gold remains supported above $1,500.”

John Weyer, co-head of commercial hedging at Walsh Trading, agreed gold would be supported by the new coronavirus outbreak.

“It’s still a cloud hanging over the market,” Weyer said. “Whenever fear hits [equities] hard, that’s a good reason for gold to go up.”

Richard Baker, the editor of Eureka Miner’s Report, said Comex gold could hit $1,590 next week and break through the $1,600 level in the coming weeks.

“It’s all about the Wuhan coronavirus — gold went up, everything else went down,” Baker said. The declared global health emergency had a chilling effect on financial markets this week, with gold gaining against equities, key commodities, and major currencies.”

George Gero, managing director of RBC wealth management, predicted that gold was rising not only because of the virus outbreak but also because of Brexit and the US presidential impeachment, as well as economic news that could worry financial investors.

Jasper Lawler, head of research at London Capital Group, said: “I am happy with the state of the gold market and I think prices will continue to rise.”

Afshin Nabavi, head of trading at MKS, said Chinese market participants could return next week after the lunar New Year holiday.

“I want to buy on dips and expect prices to rise,” he says. He expects gold to trade in a range of $1,545 to $1,595. “Beyond $1,600, we should hit a high of $1,611 hit earlier in January, when Iran launched missiles.”

Meanwhile, Saxo bank’s head of commodity strategy Ole Hansen said he was “reluctantly bearish” on gold’s short-term performance. He said he was disappointed by gold’s performance during a week of “terrible uncertainty”, adding that the market appeared to be losing momentum.

“If there was ever a week when gold was supposed to be the best, it was this week, and it wasn’t,” Hansen said. This is not a short gold environment, but you also have to admit that gold is not performing as well as it should.”

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