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Survey Participants Look For Higher Gold Prices Next Week

Friday December 28, 2012 12:15 PM

Most participants who took part in Kitco News’ weekly gold survey said they look for the precious metal to move higher next week.

Out of 33 participants, 19 responded this week. Twelve see prices up, while four see prices down and three see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

Several cited potential for a “dead-cat bounce” or a rebound from what they saw as “oversold” conditions. Comex gold hit a four-month low last week before range trading this week in thin holiday conditions. Some suggested buyers currently on the sidelines may be looking to wade back into the market at the start of the New Year.

“The decline this month, on concerns about the fiscal cliff, (is) overdone,” said Adrian Day, president of Adrian Day Asset Management. “Once we get through this week, the monetary factors will start to dominate again, and they are not only more important for gold, but also overwhelmingly positive. The Fed will more than double its monthly bond purchases starting in January, the new Japanese government has promised further stimulus, the new Bank of England governor has indicated additional easing is necessary, and the European Central Bank may finally start to buy sovereign (and bank) bonds, and walk the walk it so loudly talked in the summer (“we will do whatever is necessary”).  In addition, China, with low inflation, has room for additional stimulus, if that were to prove necessary.”

Those who look for further weakness cited technical factors and caution toward commodities generally as the so-called U.S. fiscal cliff negotiations continue in Washington. One looking for sideways action also cited a hesitancy of traders to act aggressively while the cliff issue lingers.

One analyst warned of potential for volatility, whichever way gold moves.

“The first week of each year is historically a volatile week for gold,” said Ken Morrison of Morrison On The Markets, who looks for a price retreat. “Over the past five years, price has moved at least 3% (up or down) by the end of the first week compared to the prior week's close and in 2008 it moved by 5%.”

Kitco Gold Survey

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

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