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Survey Participants Heavily Bullish On Gold Prices For Next Week

Friday June 20, 2014 12:08 PM

(Kitco News) - A strong majority of participants in the Kitco News Gold Survey forecast higher prices next week, as many expect the yellow metal to build on momentum uncovered this week.

Out of 37 participants, 26 responded this week. Of those, 18 see higher prices, six see lower prices 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 bullish for this week. As of 11:30 a.m. EDT, Comex August gold was up about $42 for the week.

“The gold market has finally woken up to the fact that the Federal Reserve is going to continue to be very accommodative. Fed Chairwoman Janet Yellen herself (made) clear that any interest hikes are some time into the future and inferred that higher inflation is not a real concern of hers. So gold jumped after the (Federal) Open Market Committee meeting put out its statement and continued rallying. Iraq supports gold but is not the primary reason gold has moved up,” said Adrian Day, chairman and chief executive officer of Adrian Day Asset Management.

Ole Hansen, head of commodity strategy at Saxo Bank, echoed similar views.

“The triple combination of a slightly more dovish Fed, the crisis in Iraq and the technical break back above the 200-day moving average leaves the door open for higher prices next week. A strong silver close this Friday could signal a break above the downtrend from 2011 and that could spur this metal on to further gains,” he said.

Those participants who call for weaker prices next week said considering the rally came so swiftly, a pullback might be in order. Additionally, they noted little physical demand on the move higher, which has been a problem plaguing gold for a few months now.

“I can see by the gold forward rates that the buying was coming from the hedge fund/spec (speculative) community and not the physical buyers. The physical buyers have actually turned slight sellers at these levels. The buying on Thursday seemed to me to be panic short covering. A settlement above $1,325 should attract some aggressive buying from the fund sector but until them I remain slightly bearish at these levels,” said Kevin Grady, owner Phoenix Futures and Options LLC.

A few participants who are neutral on prices said they believe gold needs to consolidate the current gains before it can make its next move.

Related Stories:

Kitco Gold Survey

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



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