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Gold Prices Expected To Fall Next Week – Survey Participants

Friday November 7, 2014 12:00 PM

(Kitco News) - A majority of participants in the weekly Kitco News Gold survey expect prices to fall next week, with Friday’s rally seen as a selling opportunity.

Out of 36 participants, 23 responded this week. Of those, six see higher prices, 14 see lower prices and three 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 down about $7 an ounce for the week.

Survey participants who are bearish said the trend in gold remains lower despite Friday’s rally.

Kevin Grady, owner of Phoenix Futures and Options, said the action on Friday is likely short covering, particularly since gold fell to four-and-one-half-year lows earlier this week. Short covering is when traders who sold back buy those positions to exit the trade.

“We’ll see selling of rallies,” he said. “All the data is negative for gold. What we’re seeing is short covering and it’s healthy for the market.”

Those who see higher prices said the market could continue with the current rebound.

“There has been a lot of big news over the last two weeks that propelled a big rally for USD (U.S. dollar) and knocked down gold, including the BoJ (Bank of Japan) and ECB (European Central Bank) meetings and U.S. data announcements. With USD-related news slowing next week, I think it will correct, enabling gold to continue clawing back recent losses,” said Colin Cieszynski, senior market strategist at CMC Markets.

Yet, Frank Lesh, senior broker and futures market analyst, Futurepath Trading, said Friday’s rally may have been the corrective bounce bulls were expecting. He said Friday’s October nonfarm payrolls report encouraged short covering in gold and selling the dollar, and because so many traders were already short ahead of the jobs report, there was little chance for them to sell into the new low gold made in overnight trade.

“Gold is oversold and the dollar overbought so most traders were not looking to add to positions at these extremes, so we get a corrective bounce for gold and decline for the dollar.  The question now becomes how much of a correction will occur? I expect consolidation for both markets next week which means I am back to a neutral stance for gold,” he said.

Related Stories:

Kitco Gold Survey

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



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