Friday December 30, 2011 12:02 PM
Gold prices should rise next week following steep losses this week, most participants in Kitco News’ Gold Survey said.
In the Kitco News Gold Survey, out of 32 participants, 19 responded this week. Of those 19 participants, 14 see prices up, while four see prices down, and one is neutral on prices. Market participants include bullion dealers, investment banks, futures traders, money managers and technical chart analysts.
After falling to a low of $1,523.90 an ounce on Thursday, gold prices rebounded on short covering, traders said. That rebound could continue in early next week.
“Friday’s strong price rebound may be signaling a period of price consolidation is at hand. We may see renewed short covering buying that has the potential to once again test the $1,600 level, basis the February futures, next week,” said Mike Zarembski, senior commodity analyst at optionsXpress.
The $1,600 area could prove to be stout resistance and most survey participants think that ceiling will hold. Many who see prices higher next week said they don’t believe the gains will be sustainable, and said it’s very possible gold prices will retreat, after testing the upper band of resistance.
Those who see weaker prices next week said, while gold might be oversold in the short-term, the medium-term technical picture has turned negative and that could lead to weaker prices, even as geopolitical worries heat up, such as saber-rattling by Iran over possibly closing the Straits of Hormuz, a key shipping lane for oil transportation. Normally geopolitical worries will be supportive for gold.
The participant who is neutral on prices wants to see how the current price trend develops before making a decision whether to return to the market in the New Year.
By Debbie Carlson of Kitco News email@example.com
Alexander Letourneau contributed to the survey.