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Gold Survey: Mixed Outlook For Gold Prices Next Week –Survey Participants

Friday April 12, 2013 12:08 PM

Gold’s push through $1,500 an ounce on Friday has left survey participants in the weekly Kitco News Gold Survey torn on price direction for next week.

In the Kitco News Gold Survey, out of 34 participants, 21 responded this week. Of those 21 participants, 10 see prices up, while 10 see prices down, and one sees prices moving sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

Those who see higher prices said the underlying fundamentals of ultra-loose monetary policy and strong physical buying interest, especially from China, may limit losses. However, some believe the break on Friday was a washout and might have gone too far, too fast in one day.

Richard Baker, editor, Eureka Miners Report, said he thinks gold has a chance to bounce next week after Friday’s sell off, although the rebound could be limited as the larger sentiment toward gold is still negative.

There’s been “a rotation of money away from gold assets into the U.S. stock market with gold losing more than 20% of value relative to equities from the November peak… Other factors influencing gold price are fears of liquidation by central banks in the troubled southern countries of the eurozone and the eventual unwind of the Federal Reserve from its present generously accommodative policies. I have a sense that gold is presently oversold and will see some relief next week although (it will be) still constrained...” he said.

Those who see weaker prices note the trend for gold has been lower lately. Gold will close lower for the third consecutive week this week, unless it rallies sharply higher in late dealings.

Adam Klopfenstein, senior market strategist with Archer Financial Services, looks for gold to remain on the defensive. The metal has been hurt by a stronger dollar but was not able to benefit Friday morning from weaker equities, he points out. Some prominent investors do not appear as bullish as at one time and the market got news this week of possible Cypriot gold sales to help fund a bailout. Meanwhile, there are ideas that the U.S. may be nearing the end of an easing cycle, he says.

“We’re probably at the end of a baseball game, probably in the eighth inning, and I would say if it’s the eighth inning, it’s probably time to get your stuff together and go home pretty soon,” he said. “The game is almost over. That’s probably why you’re finding gold being a lackluster part of a portfolio. There is a lot of investor exhaustion in gold now and I think you’re going to find gold prices continue to head lower, although I’m not looking for them to fall substantially from these levels.”

The participant who is neutral said he is waiting to see how Friday’s sell-off affects early action next week before deciding whether to get back into the market.

Kitco Gold Survey

Allen Sykora contributed to this survey.

By Debbie Carlson of Kitco News dcarlson@kitco.com

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