Slightly Higher Bias For Gold Prices Next Week – Survey Participants

Friday September 09, 2011 12:31 PM

Survey participants in Kitco News’ Gold Survey are split over the direction for gold prices for next week, but there is a slight bias for higher prices as the worries about Europe and general concerns about the U.S. economy and political uncertainty there give investors reasons to buy the metal.

Still, not everyone is convinced, given the big volatility in the market and gold’s difficulty in sustaining moves over $1,900 an ounce.

In the Kitco News Gold Survey, out of 34 participants, 21 responded this week. Of those 21 participants, nine see prices up, while six see prices down, and six see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts.

Sterling Smith, commodity trading adviser and market analyst with Country Hedging, said he’s bullish because of the mounting problems in Greece, which is teetering on default. He said credit default swaps on Greek debt are at 91% chance of a default and one-year yields are now near 93%.

“I think it is not out of the question that an actual default from Greece occurs next week. The market has basically defaulted them already,” Smith said.

President Obama laid out a speech on Thursday outlining a roughly $450 billion plan to boost jobs, but faces stiff Republican opposition, so the U.S. political tensions also remain supportive for gold’s price, several said.

Yet not everyone is convinced gold is going up. Some said the negative sentiment toward the U.S. economy may have been priced in at current levels. Several added the market needs to build a base after two attempts to stay over $1,900, plus the Federal Open Market Committee meeting on Sept. 21-22 could keep traders sidelined. That doesn’t mean that volatility is going away, however.

Those who see weaker prices near-term point out that despite gold’s moves to new highs, the rally hasn’t been accompanied by rising open interest in the futures market nor a significant increase in ownership in the physically backed exchange-traded funds. Further, others said, the dollar has moved up, putting pressure on dollar-denominated gold.

Kitco Gold Survey

By Debbie Carlson of Kitco News dcarlson@kitco.com

Cecilia Tulikowski-Denison and Alexander Létourneau contributed to the survey.

Editor’s Note:

Kitco News will provide readers with comprehensive print and video coverage of three-major precious metals market events in New York, Toronto and Montreal during the next two weeks.

First, Kitco News will supply live coverage on Wednesday, Sept. 14, of the CPM Platinum Group Metals Seminar in New York. That will be followed by the Toronto Resource Investment Conference September 15-16, and then the London Bullion Marketing Association meeting in Montreal September 18-20.  

The CPM Group's Platinum Metals Group Seminar Sept. 14 will showcase presentations from some of the leading analysts and investors in the PGM sector. Register to watch the CPM Platinum Group Metals Seminar Live (Free Registration): http://cpmevents.kitco.com/

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