Majority Of Survey Participants Expect Higher Gold Prices Next Week

Friday July 27, 2012 12:02 PM

Comments out of European Central Bank officials this week supported gold prices and the majority participants in the Kitco News weekly Gold Survey said they expect the value of the yellow metal to continue to build on this week’s gains.

In the Kitco News Gold Survey, out of 33 participants, 25 responded this week. Of those 25 participants, 16 see prices up, while three see prices down, and six are neutral or see prices moving sideways. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

Several survey participants pointed to comments from the ECB as supportive to gold and enough to help gold sustain its rally into next week.

“The sudden euro rally against the dollar suggests that statements this week by (council member Ewald) Novotny of Austria and (President Mario) Draghi of the ECB, without contradiction from the (German Chancellor Angela) Merkel forces, are serious and will lead to more intervention for European debt relief.  It will delay the global slowdown, but not its inevitability.  This is a short-term plus for gold, but more importantly, a definite long-term bonanza,” said Bill Goldman for 3GF Corp.

Those who are neutral on gold said they don’t see the metal moving out of its larger range and not likely to break substantial overhead resistance at $1,640 an ounce, although several have moved up support levels to the $1,580 to $1,590 area.

Those who see weaker prices next week urged market participants to be wary of this week’s rally.

“Gold is up on expectations of further stimulus and we may not see that. Certainly, if we don’t, gold is liable to slip down again, to lower end of recent range. This is a very short-term forecast, for next week, and does not change the fundamental bullish outlook.  But I would not chase this rally unless we see something out of the Fed,” said Adrian Day, chairman and chief executive officer, Adrian Day Asset Management, who sees prices down a “little” next week.

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By Debbie Carlson of Kitco News dcarlson@kitco.com

Allen Sykora contributed to this survey.