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Split Views On Gold’s Price Direction For Next Week

Friday August 29, 2014 12:08 PM

(Kitco News) - Survey participants in the weekly Kitco News Gold Survey are split over their views on gold, with no one group capturing the majority but a nominal number lean bullish.

Out of 37 participants, 22 responded this week. Of those, nine see higher prices, six see lower prices and seven 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 bearish. As of 11:30 a.m. EDT, Comex December gold was up about $8 for the week.

Those who see higher prices said they believe the geopolitical news will give gold support.

“With heightened tension in Ukraine and the possibility of a U.S. strike on ISIL (Islamic State of Iraq and the Levant) inside Syria, with all that might mean, there will be a strong bid under gold.  This follows a period when geopolitical tensions appeared to be easing, so we are looking for gold to continue to recover from early August sell-off,” said Adrian Day, chairman and chief executive officer, Adrian Day Asset Management.

Yet bears say the geopolitical impact on gold has only fleeting impact and other factors may eventually weigh on gold. Richard Baker, editor, Eureka Miner Report, said gold isn’t likely to escape losses in other commodity markets.

“Other than geopolitical spurts, it is unlikely that gold can sustain higher prices in a broadly declining commodity market. My present commodity value of gold when compared to oil, copper and silver is $1,215 suggesting the yellow metal is carrying a $70 per ounce premium to this aggregate. As this premium declines, gold will approach its commodity value in the range of $1,100 to $1,210 per ounce by year-end.”

Several market watchers said gold will continue to hold in its range.

“Gold remains trapped in a range as improving economic conditions, the threat of rising interest rates and a strong dollar limit the upside. Geopolitical risk and the resulting ‘insurance’ demand support the market. Volume is way off as speculators are just not interested in this sideways market. Right now, there are greater opportunities elsewhere. This situation can change quickly, but until then all there is to do is ‘scalp’ trade and wait for the market to show some direction and go with it. I remain neutral,” said Frank Lesh, senior futures market analyst and broker, Futurepath Trading.

Related Stories:

Kitco Gold Survey

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



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