Solid Majority Of Survey Participants See Weaker Gold Prices Next Week

Friday May 30, 2014 12:00 PM

(Kitco News) -A solid majority of participants in the Kitco News weekly gold survey see weaker prices next week after the yellow fell through technical-chart support earlier this week.

Out of 33 participants, 27 responded this week. Of those, 18 see prices lower, seven see prices higher and two see prices trading sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

Last week, survey participants were slightly bullish for this week. As of 11:30 a.m. EDT, Comex August gold was down about $45 for the week.

Those who see weaker prices continuing say now that gold fell through the technical-chart wedge formation, further losses are possible. Kevin Grady, president Phoenix Futures and Options, said both fundamental and technical reasons are weighing on gold.

“The forward rates are continuing their progression into positive territory which signals to me that the physical buying is drying up even at these levels. I would expect the price-sensitive buyers to surface again near the $1,225 area. We also saw the longs liquidate heavily with a drop in (futures market) open interest of 24,000 contracts from Wednesday's trading. I will continue to monitor the forward rates for any sign of the physical buyers. Until that happens, I think gold will continue on its present course,” Grady said.

Those who see prices rising next week said gold could see a bounce after such a sharp break.

The “gold price faces a double-threat: record-breaking U.S equities and a strengthening U.S. dollar. As the unloved stepchild in the commodity family for the last six weeks, the family now finds itself under pressure with downturns in oil and copper and ominous warning signals coming from tumbling iron ore prices in China. The yellow metal is likely oversold and some technical relief may come with the new month. Russian troops pulling away from Ukraine’s border removes most geopolitical reasons to rally back to the $1,300 level, but gold could challenge this week’s high of $1,267 per ounce,” said Richard Baker, editor, Eureka Miner.

Those who see prices sideways or are neutral say gold prices may try to stabilize after this week’s selloff.

Related Stories:

• Gold & Silver Bears In Command, Technical Posture Deteriorating: Wyckoff
• Comex Gold Extends Slide On Technically Oriented Selling

Allen Sykora contributed to the survey.

By Debbie Carlson of Kitco News; dcarlson@kitco.com
Follow me on Twitter at @dcarlsonkitco

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