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Higher Gold Prices Forecast For Next Week By Survey Participants

Friday June 11, 2014 12:04 PM

(Kitco News) - Higher gold prices are expected by a majority of survey participants in the weekly Kitco News Gold Survey, following strong technical chart performance and geopolitical worries.

Out of 37 participants, 25 responded this week. Of those, 17 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 mildly bullish for this week. As of 11:30 a.m. EDT, Comex August gold was up about $18 for the week.

Many of those who forecast higher prices next week cite both firm technical chart patterns or expect that gold will hold a geopolitical premium.

“The divergence between copper and crude oil relative to gold has widened to levels not seen since mid-March. This four-month period overlaps Comex gold's four-month intraday high of $1,346.80 per ounce. More ominously, the divergence spike … repeats a ‘double-peak’ characteristic that preceded the Great Recession and market turmoil following Arab Spring 2011. The witches brew this time includes multi regional conflicts -- Ukraine/Russia, Iraq/Syria, Israel/Hamas  -- re-emerging anxiety about the financial health of Europe's peripheral countries and concerns about China's recent import/export data,” said Richard Baker, editor, Eureka Miner.

Those who see weaker prices said if the U.S. dollar strengthens, gold will retreat.

“The market remained in the $1,310-$1,340 closing-basis range as I expected, but with the dollar showing signs of strengthening, I'm inclined to stay with a $1,325-$1,350 range in the week ahead. You can put me in the bearish category for the week ahead,” said Ken Morrison, editor of the online newsletter Morrison on the Markets.

Just a few participants are neutral on the market or see sideways trade.

“I see gold trading unchanged over the next week; it may retest its $1,330 breakout point but should finish near current levels.  Gold had a very nice breakout this week but RSI (relative strength index readings) have become overbought, so it may take some time to consolidate the gains as is normal following a big rally. Growing concerns about the European banking sector and (Federal Reserve) Chair (Janet) Yellen’s testimony to Congress, which is likely to … come off as dovish, may keep a floor under gold at a higher level in the near term,” said Colin Cieszynski, senior market strategist at CMC Markets.

Related Stories:

Kitco Gold Survey

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



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