Editor's note: Catch the Latest Happenings with Kitco Video News!

Gold Survey: Survey Participants Look For Further Decline In Gold Prices Next Week

Friday June 21, 2013 12:04 PM

(Kitco News) - The majority of participants taking part in the Kitco News weekly gold survey look for the metal to extend lower next week.

This week’s survey had smaller-than-normal participation, with 19 of 36 regular respondents taking part. Of those, 11 see prices down, while four see prices up and four look for sideways consolidation. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

Some look for the market to continue to factor in scaled-back quantitative easing in the U.S., following Federal Reserve commentary this week, which would continue to pressure gold.

“Gold should continue its downtrend in anticipation of the Fed’s early tapering of QE this fall, along with inflation data being revised lower,” said Phillip Streible, senior commodities broker with RJO Futures. “It seems the market is convinced that QE will completely end by mid next year.”

Ralph Preston, principal with Heritage West Financial, also suspects that the market could remain on the defensive with a weak technical-chart picture. Prices extended lower Thursday after a classic bear flag formation from mid-April, he said. “It’s more market psychology and deleveraging,” he said.

Some looking for an uptick in gold, however, suggest the market has over-reacted as it factored in future scaling back of monetary stimulus.

“After all, this has been discussed all year, without action, and we are only talking about a scaling back of the additional stimulus (the $85 billion a month in bond buying) that started this year,” said Adrian Day, president of Adrian Day Asset Management. “But this is the problem with monetary stimulus; it’s like a drug where ever-increasing injections are required just to stay flat. The Fed has painted itself—and the U.S. and global economy—into a corner and can’t get out of it neatly. Given the global monetary accommodation that continues, I suspect we’ll see a bounce next week.”

Last week, 65% of survey participants were bullish, but gold fell this week instead following a Federal Open Market Committee meeting and press conference by Chairman Ben Bernanke. Since May 13, 2011 when the survey started, participants have been right 44% of the time, as of June 7. Until Nov. 23, survey participants had more than a 50% accuracy rate, suggesting that since then there has been a change in the trend for gold.

Kitco Gold Survey

By Allen Sykora of Kitco News asykora@kitco.com

kitco news

Precious Metal Charts

Click to see this Precious Metal chart
  1. 24h
  2. 30D
  3. 60D
  4. 6M
  5. 1Y

Interactive Chart