EDITOR'S NOTE: Don’t Miss a Beat! Kitco News is launching a weekly Newsletter highlighting  our most popular features, articles and videos! Sign Up by clicking on the Kitco Newsletter Box.

Survey Participants Split On Gold's Direction But Lean Bullish

Friday July 18, 2014 12:04 PM

(Kitco News) - Participants in the weekly Kitco News Gold Survey are split over gold’s price direction for next week as no one group has an outright majority, although a nominal number lean bullish.

Out of 37 participants, 25 responded this week. Of those, 11 see higher prices, nine see lower prices and five 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 down about $19 for the week.

Those who see higher prices say geopolitical concerns will keep gold bid.

“The tragic geopolitical situation, however it transpires in both Gaza and Ukraine, gives gold support. At the same time, the market had overcompensated for the reduction in stimulus by the Fed and with sentiment on gold very negative. So up next week,” said Adrian Day, chairman and chief executive officer, Adrian Day Asset Management.

Those who see weaker prices took an opposite view of gold’s reaction to geopolitical worries.

“If a day of rising tensions in Russia and Ukraine and ground-fighting in Gaza can only muster a 1% rally in gold, what will it take to really get a rally going? Funds' trading performance in gold has been horrific the past two-three months... getting short at the low, getting long at higher levels, now caught in the middle of a $1,275-$1,350 trading range. I believe the recent poor performance is having the effect of funds going to the sidelines which is one reason gold can't rally well. I look for gold to drift a little lower probably re-testing $1,275'ish over the next one to two weeks,” said Ken Morrison, editor of online newsletter Morrison on the Markets.

A few participants said gold prices have little short-term trend right now, so they expected choppy, range-bound trade. Frank Lesh, broker and futures analyst with FuturePath Trading, said he’s had a hard time trying to be bullish gold and is opting for being neutral right now.

The “gold trade has been a real disappointment for the longs the past week. Gold opened on the high of the week on Monday and immediately sold off on profit taking, hitting sell stops and cleaning out any recent buyers. Then the geopolitical problems (surfaced) and the market can’t hold the gains from the safety bid. The downing of the aircraft is a tragic, but not an act of war and the Israeli invasion of Gaza is something that has happened before without serious market disruptions. Either situation could easily turn much worse, but the markets will take a wait-and-see attitude for now. Many traders remember getting burned when the initial tension of the Russia/Ukraine started and gold spiked to $1,390’s, only to quickly give back any gains. I have been trying to be bullish this market, but the action the past several weeks has me back to a neutral stance,” Lesh said.

Related Stories:

Kitco Gold Survey

Allen Sykora contributed to this story.

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



kitco news