Gold Survey: Survey Participants Split Over Gold Direction Next Week

Friday July 12, 2013 12:04 PM

(Kitco News) - There is no outright majority of opinion on the outlook for gold price direction for next week, with participants in the Kitco News gold survey split, although there are a few more participants who forecast higher prices than those who see weaker prices or are neutral.

In the Kitco News Gold Survey, out of 36 participants, 25 responded this week. Of those 25 participants, 12 see prices up, while seven see prices down and six see prices moving sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

Last week survey participants were split in half equally, a rare occurrence. As of noon EDT Friday, prices on the week were up about $66 on the week. Since May 13, 2011 when the survey started, participants have been right 44% of the time, as of June 28. 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 expect the current bounce in gold to continue. Some suggested short covering, where traders who previously sold positions buy them back to exit the trade. It’s well known that speculative traders hold hefty short positions in the Comex gold futures market and some participants said if the bounce in gold prices continues, these speculators will likely be forced out of the market.

Darin Newsom, senior analyst at DTN, said technical chart factors suggest some strength for gold.

“Weekly stochastics for the August contract have seen a bullish crossover below the oversold level of 20%, indicating a turn in the secondary (intermediate-term) trend,” he said.

Those who see weaker prices said gold struggles when it comes close to the $1,300 area.

Kevin Grady, owner of Phoenix Futures and Options, said he’s looking for prices to go lower ultimately. “We could trade to $1,300, but I think we’re going to start to see these mines starting to hedge. There are a lot of uncomfortable conversations going on now. If we get to $1,321, which was the support when we had the first big break, I think we’ll start to see some hedging coming in. So far we haven’t,” he said.

The participants who see prices going sideways or are neutral said after this week’s strong rally, it’s possible that gold could tread water in a range.

“Put me down for ‘unchanged’ which really means -- in the absence of some powerful news -- anything between $1,250 and $1,300,” said Jeff Nichols, managing director, American Precious Metals Advisors, and adviser to Rosland Capital.

Allen Sykora contributed to this survey.

By Debbie Carlson of Kitco News dcarlson@kitco.com

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