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Survey Participants Lean Slightly Bearish Toward Gold Prices Next Week

Friday May 9, 2014 12:00 PM

(Kitco News) -Opinions over the direction for gold prices next week are mixed, but survey participants in the weekly Kitco News Gold Survey lean bearish.

Out of 33 participants, 24 responded this week. Of those, 11 see prices weaker, while six see prices up and seven see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts.

Last week, survey participants looked for prices to fall this week. As of 11:30 a.m. EDT, Comex gold for June delivery was down $16 for the week.

Those who see weaker prices said the macroeconomic environment for gold offers little upside potential for the yellow metal. Dominick Cimaglia, senior dealer at Alliance Financial, said the combination of low growth, low inflation and little physical demand is weighing on gold.

Others point to a weak technical chart picture for gold. “The technicals of the market remain poor, and two failed rally attempts are beginning to weigh on the long side of the market. Twelve hundred seems to be a much more likely outcome than $1,400 for the time being,” said Sterling Smith, futures specialist, Citibank Institutional Client Group.

Those who see price rising next week say that the simmering geopolitical tensions between Russia and Ukraine cannot be counted out.

“I’m bullish next week. I think you’re going to see (Treasury) yields down, I think gold may still have its safe-haven bid because of Ukraine, and you don’t know what’s happening with equities. Do I see a big rally, no? But I think we can be above $1,300,” said Adam Klopfeinstein, market strategist with Archer Financial Services.

The tensions in Eastern Europe and gold’s headline-driven response have some gold watchers on the sidelines for now.

“The problem with gold is already has a $25-$50 (an ounce) geopolitical risk premium in here and it easily could have another $25-$50 on the upside. Where gold goes from here is anybody’s guess. Up, down, sideways, who knows? I’m neutral, but I expect volatile trade,” said a North American bullion dealer.

Kitco Gold Survey

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



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