Survey Participants Tilted Bullish On Gold Prices Next Week

Friday August 05, 2011 12:37 PM

There is a slightly bullish tilt in sentiment toward gold for the next week among participants in Kitco News’ weekly survey.  The largest bloc  is looking for prices to keep trending higher as traders and investors continue to seek a safe haven amid worries about the global economy and debt levels in the U.S. and Europe.

However, there were also plenty of participants who feel some sort of retracement is likely, particularly after prices ran up to record highs this week.

In the Kitco News Gold Survey, out of 34 participants, 21 responded this week. Of those 21 participants, 10 see prices up over the next week, while seven see prices down and four see prices sideways or unchanged. Market participants include bullion dealers, fund managers, investment banks, futures traders and technical-chart analysts.

Bulls cited some of the same factors that have been fueling the recent rally—rising debt levels in developed nations, a lack of confidence in the dollar and other fiat currencies, plus worries about a soft economy meaning prolonged loose monetary policy. One also cited potential for physical buying to start picking up ahead of the autumn “wedding season” in India.

There is a growing realization that debt in the U.S., Europe and Japan is “out of control” and policy leaders do not know how to deal with it, said Adrian Day, president and chief executive officer of Adrian Day Asset Management. “In the U.S., there is no willingness to make the sort of cuts in spending that would be required, and policy leaders are quite prepared to let the dollar sink,” he said. “If fiat papers are doomed, investors turn increasingly to gold.”

Those who look for near-term weakness cited potential for more selling of gold to meet margin calls and cover losses in other markets, as was reported during a decline from record highs Thursday when equities tumbled. These participants also cited potential for a technical correction in the market, with buyers perhaps hesitant to keep rushing in at the highs without some sort of pullback first.

Kitco Gold Survey

By Allen Sykora of Kitco News; asykora@kitco.com

Alexander Létourneau contributed to the survey.

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