SURVEY SAYS…Gold To Hold Onto Brexit Gains Next Week

(Kitco News) - Gold prices continue to hold onto Brexit gains, which has a majority of market professionals and investors expecting the uptrend to spill over into next week, according to Kitco News’ latest Wall Street vs. Main Street Gold Survey results.

Wall Street

Bullish 73%

Bearish 20%

Neutral7%

VS

Main Street

Bullish65%

Bearish21%

Neutral14%

The Brexit uncertainty has sent shockwaves through financial markets, giving gold a boost as investors seek safe-haven assets. Although gold has come off last week's highs, the August Comex futures are still clinching onto gains, trading near $1,340 an ounce.

A total of 15 analysts and traders took part in Kitco's survey, with a whopping 73% calling for higher prices next week. At the same time, 20% expect to see lower prices while 7% are neutral.

Meanwhile, on Main Street, 574 participants voted this week. A total of 372 respondents, or 65%, said they were bullish for the week ahead, while 119, or 21%, were bearish. The neutral votes totaled 83, or 14%.

This is just slightly different from last week's survey results when 73% of market professionals and 62% of retail investors said they were bullish. This was the fourth straight week both Main Street and Wall Street looked for higher prices, and for the fourth straight week they were right.

"I'm moderately bullish as we slowly return to basics of looking for additional havens for currency devaluations, low interest rates as well as political and geopolitical events," George Gero, managing director for RBC Wealth Management, told Kitco News.

Market professionals mostly agreed that although markets seem to have calmed down from the Brexit chaos, investors are still uneasy and focused on what central banks will do next; this should bode well for gold.

"Gold futures should continue to gather strength with uncertainty over the longer-term ramifications of the Brexit vote leaving the Fed in a bind to not raise rates anytime in the near future. A year-end price target of $1,400 looks very achievable under these circumstances," suggested Phil Streible, senior market strategist for RJO Futures.

Currency volatility is also helping gold prices, noted Richard Baker, editor of the Eureka Miner Report, giving an upside target of $1,360 an ounce for gold next week.

"Market uncertainty keeps the pound sterling near its 31-year low, yen strength is approaching the 100-level and the yellow metal fast approaching $1,400 per troy ounce," he said. "The world awaits stimulus from somewhere -- either BOE or BoJ accommodation would provide a catalyst higher. In this light, I remain bullish gold."

In response to the Brexit vote and the resulting market turmoil, Bank of England Governor Mark Carney announced Thursday that the central bank could look to cut interest rates within months. This would have inevitable effects on other central banks – including the Federal Reserve – which is why Henry To, analyst at CB Capital Partners, remains bullish on gold.

"The U.S. isn't immune, as some traders are now anticipating the Fed to cut rates, not hike rates as previously expected," he said.

However, not all participants are optimistic with one of the few bearish calls this week coming from Ira Epstein, director of the Ira Epstein division of Linn & Associates LLC, who said he thinks gold lacks fresh news to push it higher next week.

"Gold doesn't have a new story to work off of right now given that Brexit is a done deal and Bank of England has said it's going to do something this summer to stimulate its economy," he said. "That didn't move gold, so I think gold needs to consolidate before moving up again."

Like last week, Ken Morrison, editor of the newsletter Morrison on the Markets, sees sideways trading for the yellow metal.

"Until gold closes above $1,350 and sustains the level for more than a day, I remain neutral on gold."

By Sarah Benali of Kitco News; sbenali@kitco.com