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No Clear Majority Of Opinion Seen On Gold Prices In Weekly Survey

Friday December 14, 2012 12:05 PM

Opinions about the direction of gold prices next week are divided in the weekly Kitco News Gold Survey, with bulls outnumbering bears and those seeing sideways trading, but not enough of them to score over 50% of the survey.

In the Kitco News Gold Survey, out of 33 participants, 26 responded this week. Of those 26 participants, 12 see prices up, while five see prices down and nine are neutral or see prices moving sideways. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

Those who see higher prices said they expect gold will bounce off the lows established around November at $1,675 an ounce as they expect buying interest will materialize there. They remain bullish on gold even after the metal’s surprise sell-off after this week’s announcement by the Federal Open Market Committee to add monetary stimulus to the U.S. economy.

“Gold’s sell-off on renewed concerns about the looming ‘fiscal cliff’ is overdone. Yes, a recession would be negative for gold, but the Fed’s continued commitment to easy money is the overwhelming driver for gold,” said Adrian Day, chairman and chief executive officer at Adrian Day Asset Management.

Participants who are neutral on prices or see sideways action said either they have moved to the sidelines on gold heading into the last full trading week of the year, waiting for more normal trading conditions to resume next year. Others said given the likelihood of lighter volume and no fresh information, prices are likely to trade between $1,675 and $1,725, with prices likely to hew closer to $1,700.

Ralph Preston, principal at Heritage West Financial, said while he’s still overall bearish on gold prices because the market hasn’t taken out $1,725, he said for next week he’s neutral on direction.

“I am looking for a test of $1,675 next week but expect the market to hold. A close below $1,675 opens the door and paves the way for a move down to $1,650.

However, given the fundamental backdrop I suspect that $1,675 will hold therefore I will be neutral going into next week,” he said.

He added, though, if tensions escalate in the Middle East that could cause gold prices to rally on geopolitical worries.

Those who are bearish on gold prices said the dragging on of talks over the fiscal cliff, falling open interest in the Comex gold futures and profit-taking into the end of the year will continue to keep gold under pressure.

Kitco Gold Survey

Allen Sykora contributed to this survey.

By Debbie Carlson of Kitco News dcarlson@kitco.com

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