Friday May 18, 2012 12:05 PM
Following this week’s bounce from the $1,520s region, most survey participants in the weekly Kitco News Gold Survey expect gold prices to continue to build on late-week gains.
In the Kitco News Gold Survey, out of 33 participants, 23 responded this week. Of those 23 participants, 21 see prices up, while two see prices down, and zero are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.
A solid majority of participants expect prices to rally next week, especially since June gold futures on the Comex division of the New York Mercantile Exchange held the low set on Wednesday of $1,526.70. Many said the sell-off was overdone so the rebound was in due course.
“Gold made everybody right by the end of the week... bulls, bears, and fence-sitters alike can claim victory. Wednesday’s high-volume capitulation selling successfully … was followed by an impressive rally on Thursday that saw the largest one-day increase in open interest (16,000 contracts) in quite a long time. Most of the big changes in open interest the past 2-3 months have been declining so a rise of this magnitude indicates money returning to gold. Examples of technical indicators such as this tend to endure the trend so I look for gold to trend a little higher in the week ahead, settling into a $1,600-$1,625-ish range,” said Ken Morrison, editor and founder of online newsletter Morrison on the Markets.
Those who see weakness next week said they think that gold cannot build on these gains and that the rally was nothing more than a short-term bounce in an otherwise down-trending market. Worries about the eurozone, which have pressured gold recently, remain at the forefront, they add.
There were no participants who were neutral on prices
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By Debbie Carlson of Kitco News; firstname.lastname@example.org
Allen Sykora contributed to this survey.