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Gold Survey: Split Views Dominate Outlook For Gold Direction Next Week

Friday September 20, 2013 12:10 PM

(Kitco News) - Whipsaw action in gold this week is leaving participants in the Kitco News Gold Survey split in their views on where gold prices might go next week, with a nominal number expecting higher prices.

In the Kitco News Gold Survey, out of 36 participants, 19 responded this week. Of those 19 participants, nine see prices up, while eight see prices down and two are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

Last week, more survey participants were nominally bearish. As of noon EDT Friday, prices were up about $28 on the week. As of Aug. 30, survey participants have been correct two of the past five weeks.

Those who see higher prices said they expect some follow-through buying after Wednesday’s rally to occur, even with the profit taking that’s hit gold on Friday. Gold prices shot higher when the Federal Reserve said it would continue to buy $85 billion a month in bonds, rather than lower that figure, which is what the markets were expecting.

Adrian Day, chairman and chief executive officer at Adrian Day Asset Management, said it shouldn’t have been a surprise that the Fed didn’t cut back on stimulus as the Fed needs to keep interest rates low to finance government debt. 

“Without the Fed to buy Treasurys, rates would soar and the dollar sink, adding significantly and dangerously to the government’s debt service burden. So the Fed will do all it can to keep rates low and keep buying bonds. All this is bullish for gold, which had grossly overreacted to concerns about tapering,” Day said.

Participants who see weaker prices said they were disappointed by the way the market sold off on Friday.

“This market is not looking good. Even with the big rally we couldn’t settle above the 20-day moving average,” said Charles Nedoss, senior market strategist with Kingsview Financial.

On Thursday, the day after the Fed meeting, the December gold futures were above the 20-day average of $1,371.30, but closed at $1,369.30.

Nedoss said the December gold future’s drop under the 100-day and the 50-day moving averages at $1,351.50 and $1,340.70, respectively, is “disheartening. I think over the course of next week we could see the market test $1,300.”

Kitco Gold Survey

By Debbie Carlson of Kitco News; dcarlson@kitco.com

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