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Price Outlook For Gold Next Week Is Mixed

Friday November 15, 2013 12:00 PM

(Kitco News) - Survey participants’ gold price outlook for next week is mixed, with only a nominal number of participants in the Kitco News Gold Survey forecasting higher values.

In the Kitco News Gold Survey, out of 34 participants, 25 responded this week. Of these, 10 see prices up, while eight see prices down and seven see prices sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

Last week, a majority number of survey participants were bearish. As of noon EDT Friday, December gold on the Comex division of the New York Mercantile Exchange was up about $3 an ounce for the week.

Kevin Grady, owner of Phoenix Futures and Options, echoed what many survey participants said when they voted for firmer prices next week.

“Comments by (Federal Reserve Chair nominee) Janet Yellen (Thursday) suggest that any degree of tapering is not imminent. Over the past four trading sessions we have seen upwards of 18,000 new shorts enter the market. Although I do believe we did have some short covering in (Thursday’s) action, I think there is more short covering to come. We also saw some aggressive call buying (Thursday). Couple these factors together and we should see some higher prices next week,” he said.

A few survey participants believe the rally gold staged this week on Yellen’s comments will be short lived, especially after prices retreated on Friday. Sterling Smith, futures specialist and vice president of commodity research at Citibank Institutional Client Group, said the lack of inflation is bearish for gold, which along with the weak momentum will cap gold gains.

“The market should find strong resistance at $1,300,” he said.

Several participants said gold has acted more of a market for short-term traders than long-term investors, and that will likely continue.

Frank Lesh, broker and futures analyst with FuturePath Trading, said he’s neutral on gold, noting that many traders will get short, or sell gold, when it falls under technical-chart levels, only to buy back, or cover those short positions when prices rebound.

“The tapering debate continues but it is a question of when, not if. Volatility should continue and this means that gold will remain a short-term trade for most participants as they take advantage of both sides of the market. Physical buying supports the market but it is not enough to propel the market higher. ETF (exchange-traded fund) liquidation has slowed but remains a possibility,” Lesh said.

Kitco Gold Survey

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

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