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Gold Survey: Slight Majority Of Gold Survey Participants See Higher Prices Next Week

Friday June 28, 2013 12:04 PM

(Kitco News) - A slight majority of participants in the weekly Kitco News gold survey see higher gold prices next week on the idea that the weakness in the market was too much, too soon.

In the Kitco News Gold Survey, out of 36 participants, 21 responded this week. Of those 21 participants, 11 see prices up, while eight see prices down and two see prices moving sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

Last week 68.4% of survey participants were bearish. As of noon EDT Friday, prices on the week were down about $80 on the week. If that holds, then most survey participants forecast correctly. Since May 13, 2011 when the survey started, participants have been right 44% of the time, as of June 21. 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.

Participants who see higher prices said they believe the selloff in gold is overdone and was in part because of selling related to quarter-end book squaring.

Adrian Day, president, Adrian Day Asset Management, said the drop is overdone.

“Global monetary conditions remain very accommodative. (Federal Reserve Chairman Ben) Bernanke only said that the Fed might cut back on its bond buying by the end of the year if the economy improves There are a lot of qualifiers in that. And we are only talking about a reduction in the new stimulus ($85 billion a month in bond buying) added in January. We are a long way from any tightening. It will take the market a while to get over this however,” Day said.

Those who see weaker prices said the trend is down and sentiment is weak, with few reasons to step in and buy. Rich DeFalco, principal, 76 Partners, said even though gold may have suffered from liquidation ahead of the quarter-end, there’s no reason for the yellow metal to bounce next week, especially with Canada and the U.S. having public holidays.

“Volume could be light next week because of that and a lot of people might not even start the second quarter until after the Fourth of July,” he said.

He added that he’s long-term bearish, too. “The gold market is similar to the story of the three bears.....little bear was the end of 2012, mama bear was the first quarter 2013, and this week through the third quarter, maybe even fourth quarter, it’s going to be the Big Papa Bear. It wouldn't surprise me that gold falls to $925-$950 over the next three months,” DeFalco said.

There were only two participants who see prices moving sideways or are neutral on prices.

Kitco Gold Survey

Allen Sykora contributed to this survey.

By Debbie Carlson of Kitco News dcarlson@kitco.com

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