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Gold Survey: Survey Participants Mixed; Largest Share Sees Higher Gold Next Week

Friday October 04, 2013 12:10 PM

(Kitco News) - Neither bulls, bears nor fence-sitters had an outright majority in the weekly Kitco News Gold Survey, although the largest number of responses called for gold to be higher next week.

Many describe the precious metal’s direction over the coming week as a tough call due to the uncertainty over how long the U.S. government will be shut down by a political stalemate on a continuing resolution over the budget, with another fight looming over the debt ceiling later this month.

In the Kitco News Gold Survey, out of 34 participants, 21 responded this week. Of these, 10 see prices up, while six see prices down and five see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

Last week, a majority of survey participants were bullish. As of noon EDT Friday, December gold on the Comex division of the New York Mercantile Exchange was down $30.40 the week.

George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures, anticipates a narrow range but with an upside bias. More investors could turn to gold if it appears the government shutdown will become protracted, he said.

“People would start to take a second look at gold as a (safe) haven,” he said.

Ken Morrison, founder and editor of the online newsletter "Morrison on the Markets," said he does not anticipate a repeat of the apparent fund liquidation that occurred this week, as reflected by lower open interest since last Friday and a decline in prices.

“There is support in the $1,300-$1,275 area and we're assuming major fund long liquidation is unlikely to be as large a factor as this week, so we expect gold to rally toward $1,350 within the week ahead,” he said.

Kevin Grady, president of Phoenix Futures and Options, is among those who look for prices to tick lower.

“When a market stops reacting positively to bullish news, it usually goes lower,” he said. “We have a possible default looming, yet every time gold manages to rally, the sellers get more aggressive.”

The outcome of the political stalemate, of course, will be crucial.

Peter Hug, global trading director for Kitco, said “if this garbage continues in Washington on the debt issue, the metals will continue to find, at a minimum, psychological support and potentially have significant upside on a ‘fear’ safe-haven trade. If sanity rules, the market has a heavy tone and levels seen this week, i.e. $1,277 are in the cards.”

Kitco Gold Survey

By Allen Sykora of Kitco News; asykora@kitco.com

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