Friday September 18, 2015 12:40
(Kitco News) - Friday morning George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures, said in a media note that the gold bears are leaving the woods, which appears to be an accurate assessment of market sentiment according to the latest weekly Kitco News Wall Street vs. Main Street Gold Survey.
Among the market professionals surveyed by Kitco News, only one person is expecting to see lower prices next week.
Looking at the gold market, prices are preparing to end the week in positive territory, capping a three-week losing streak. At the start of Friday’s trading session, Comex December gold future hit a high of $1,141.50 an ounce, its highest price since Aug. 2. As of 12:10 p.m., gold was trading at $1,138 an ounce, up 1.88% on the day..
Looking ahead, gold prices could move higher as sentiment among retail investors has improved, with a clear majority expecting to see higher prices next week. This week 172 people participated in Kitco’s online survey. Of those 98, or 57%, are bullish on gold next week; 49 respondents, or 28%, are bearish; and 25 people, or 15%, are neutral.
Kitco’s market professional survey was even more definitive; out of 35 market experts contacted, 20 responded, of which 15, or 75%, said they expect to see higher prices next week. At the same time, four professionals, or 20%, are neutral on gold, and one person, or 5%, sees lower prices. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
According to most comments, the shift in gold’s sentiment is the result of the Federal Reserve leaving interest rates unchanged Thursday and spooking markets by highlighting the risk of growing global uncertainty on the U.S. economic recovery.
The only analyst in the bear camp this week is Richard Baker, editor of the Eureka Miner. Despite the Fed’s monetary policy decision, he said that he thinks gold’s high for September is in place and is expecting prices to fall back to $1,120 an ounce.
Although most analysts are bullish on prices in the near term, it is interesting to note that many have quantified their outlook, saying that the rally could be limited as the Fed has still left the door open to a rate hike, as early as October.
Fed Chair Janet Yellen said, during her press conference following the central bank’s monetary policy meeting, that the majority of the committee still sees higher interest rates later in the year. According to the central bank’s projections, the committee’s average for the Federal-funds rate by the end of 2015 is at 0.40%.
Yellen added that there was an argument to be made for raising rates in September; however, because of the global weakness and fragile financial market, the committee decided to err on the side of caution and leave rates unchanged.
A lot of analysts are looking for gold prices to reach $1,150 an ounce, before there is an increase in selling pressure. Others are looking for prices to reach the August high of $1,170 an ounce before the rally is capped.
“It is still too early to say if we have seen gold’s bottom,” said Ole Hansen, head of global strategy at Saxo Bank. “I think $1,170 is going to be the key level to watch next week.”
Nic Erxarhos, senior economist at CIBC World Markets, said that the Fed is still closer to a rate hike, whether it happens in December or early 2016, compared to other central banks and that will continues to support the U.S. dollar, capping any advances in gold.
“Gold has room to move a little higher,” he said. “But ultimately we believe that the U.S. dollar will remain relatively strong moving forward.”

The Fed Did The Right Thing Even If We Briefly Suffer
Friday September 18, 2015 18:38
In case we didn’t have enough of the truth-or-consequences scenario that has been catapulted into markets since the Federal Reserve decided yesterday to stand pat on rates, we now have the right wing in the U.S. Congress again troubling its own house. (And everyone’s house with it.)
Yes, we are facing another revival of the great Washington hit musical, “Let’s Shutdown The Government.” This cannot come at a worse time and only demonstrates the irresponsibility of the Congress and its utter disregard for Americans of all economic statuses.
The Fed yesterday told the world that it is extremely wary of what is going on in China and that country’s effective re-peg of its currency. That pop devaluation of the yuan annoyed U.S. financial policymakers no end, especially given the rest of China’s opaqueness regarding its economy. We have to wonder if, concealed inside the decision not to raise rates, is a threat to China that, if it doesn’t start playing by universally accepted rules, it will no longer be welcome in the big stadium with the big league teams.
After hitting a three-week trough, the U.S. dollar recovered dramatically against the euro. We shudder to think how strong the dollar would have grown if the FOMC had bumped rates 25 basis points yesterday. The green back rose only modestly against the GB pound and fell against the Japanese yen.
At one point earlier today, gold was up $19.50 per ounce. It has since fallen back to being up now only $7.50 (as of 3PM in New York). The newly re-risen dollar put a nearly four-dollar dent into the overall price of the yellow precious metal. Silver is struggling to show any kind of gain and platinum and palladium are in the red for the day.
It is interesting how the herd mentality affects even the biggest players in the markets. Is there anyone who really was biting on the idea that the U.S. – not to mention the rest of the world – has been growing so spectacularly that it needed reining in? Let’s hope not.
Yet, reactions to the Fed news release and some comments made by Chairwoman Janet Yellen would have us think that some investors and traders were discovering indoor plumbing for the first time.
Gold September 18 2015
Of course, many, many analysts thought the Fed should not have raised rates, given the global economy’s stumbling. Fed funds futures betting before the meeting indicated only about a 20 to 30% chance that the Fed would hike yesterday.
"The people betting real money never expected the Fed to do anything yesterday," said Nick Raich, CEO of The Earnings Scout. "Ultimately, the Fed did the right thing by holding."
He noted there were some who thought "if the Fed did not hike, oh my goodness, what do they know, what's so bad in the economy that we don't know."
What don’t we know? Well, first, let’s say what we know.
The U.S. legislature, like the legislatures of many developed countries, has not embarked on any significant infrastructure funding. Second, money is still too tight for housing financing. The burden of scam colleges who have sucked youngish people into taking out nearly a trillion dollars in student loans is a drag on spending by Millennials.
That much we know.
What we don’t know is how bad off China is and how much their problems will degrade the economic growth of other developing countries or of “junior” second world nations.
The developed world has to solve its own specific problems through the legislative process. That is why a potential shutdown bothers us fundamentally.
China has to learn to be honest. Failing is not fun, naturally, but succeeding using lies and then being discovered? That’s humiliating and a good way to get your partners angry with you and distrustful of you during future involvements.
For those that would like a deeper analysis, I invite you to watch today’s Weekend Review in which I look at the potential that this long corrective period in gold might in fact be over. Simply use the link at the bottom of this article to view this special report.
Wishing you, as always, good trading,
Gary Wagner