Gold Survey: Survey Participants Torn Over Gold Market Direction For Next Week

Friday June 7, 2013 12:04 PM

(Kitco News) - Friday’s U.S. monthly jobs report did not provide any guidance for market direction, so market participants are back to debating whether or not gold can break out of its current range. Participants in the weekly Kitco News gold survey are equally torn over next week’s price direction.

Until Friday’s sell off, gold was looking to end the week with gains, but the late-session break erased those hopes.

In the Kitco News Gold Survey, out of 36 participants, 22 responded this week. Of those 22 participants, nine see prices up, while seven see prices down and six see prices moving sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

Last week 63% of survey participants were bullish. As of noon EDT Friday, prices on the week were down about $11. If that holds, then most survey participants forecasted incorrectly. Since May 13, 2011 when the survey started, participants have been right 44% of the time, as of May 31. Until Nov. 23, survey participants had more than a 50% accurate rate, suggesting that since then there has been a change in the trend for gold.

Participants who see higher prices next week said prices should holding above $1,350, the lows of the current range. “I think for the short-term the bottom in metals is in. We keep going back to that $1,400 area. To really flip this thing around in the short-term we need a close over $1,423, but for next week I think we’ll at least go back to $1,400,” said Bob Haberkorn, senior commodities broker at RJO Futures.

Others who see higher prices said exchange-traded fund outflows are slowing which releases some pressure on gold; additionally, they said it’s unlikely the Federal Reserve will seriously look to taper its bond purchases anytime soon. The expectation for Fed curbing some of its bond buys put gold under pressure lately.

Those who see weaker prices said a return to the downtrend is likely now that the U.S. May nonfarm payrolls report came in as expected. Ken Morrison, editor of online newsletter, Morrison on the Markets, said this week’s dollar losses did not support gold overall.

“There was ample uncertainty, largely a result of the 3-4% rally in the yen, but dollar weakness served largely to hold gold steady. We expect the dollar-weakness has about run its course and with the anxiety over the U.S.

employment report now behind us, we expect gold may attract new willing short-sellers in the week ahead. We expect the $1,360 area will be tested sometime within the week,” he said.

The jobs report did little to alter survey participants’ views on gold and many said barring any big surprises, there is nothing to push gold out of its range.

“(I’m) looking for the market to look left, right, then left again, to remain frozen, not cross the street, and not know what to do as prices bounce between the $1,425 to $1,350 zone,” said Ralph Preston, principal at Heritage West Financial.

By Debbie Carlson of Kitco News

Gold price may rise further

Investors find ‘safe haven’ in precious metal

By CHOONG EN HAN (The Star)

KUALA LUMPUR: The price of gold may surge further following Standard & Poor's (S&P) downgrade on US credit ratings as investors look for a “safe haven” in the precious metal.

The price of gold climbed above US$1,700 an ounce yesterday following the downgrade of long-term US credit rating.

“The unprecedented S&P downgrade sent shock waves over global equities and commodities markets, driving gold prices to record highs as investors sought the bullion as a safe haven,” said Phillip Futures Pte Ltd analyst Ong Yi Ling.

The next key focus would be on the Federal Open Market Committee meeting scheduled for today. Investors are looking for indications from the Federal Reserve's policy setting committee on its next course of action.

“We expect the Fed to continue its low interest rates, but the wild card would be hints of possible future quantitative easing measures which would benefit gold prices,” said Ong.

Singapore-based Phillip Futures also raised its year-end target of gold to US$1,800 an ounce, with anticipated slower US economic growth coupled with Europe's sovereign debt problems.

“Gold price has gone up by 14% since July, and the market may claw back some of its gains in the near term as the sudden surge in price may just be a knee jerk reaction towards recent developments,” Ong said.

Meanwhile, a Singapore-based head of bullion said gold price might still have some upside amid global economic uncertainties, with the price for the precious metal likely to hover around US$1,800 an ounce by year-end.

“Market talk is that prices may hit US$2,000 by year-end, but personally I would not be so bullish, as we are currently at the crossroads; if the economy starts to shrink, gold prices would follow suit,” he said.

Investors seeking safe haven bet on gold

PETALING JAYA: Gold prices are on the way up again as concerns over debt levels in the United States and the eurozone prompt investors to move their funds to safe-haven assets.

Investors were also betting that rising agriculture commodity prices would mean higher food prices after the Standard & Poor's GSCI Spot Index, a measure of 24 commodities, rose for the third consecutive week.

Gold, also seen as a hedge against inflation and volatility, has seen gains since 2009 as an impasse over how to lower the US deficit continued.

Investor fears have also heightened amid concerns that deficit levels in eurozone members Italy and Spain could not be sustained in the long term.

A Bloomberg report said gold futures climbed for nine straight sessions to July 15, which is the longest rally since November 2009.

Analysts who spoke to StarBiz said prices would rise above the US$1,600 per ounce level in the near term due to inflation in China and the debt crises in the United States and the eurozone.

Singapore-based Phillip Futures Pte Ltd analyst Ong Yi Ling said gold was likely to rise to US$1,650 in the August to September period as demand was traditionally strong during that time.

She said that with Federal Reserve chairman Ben Bernanke not discounting another round of fiscal stimulus, this signalled to the markets that the recovery in the world's largest economy could still be a drag on global growth.

Ong added that demand for gold in China was high as both an investment and retail purchase. Investors like it as a store of value and hedge against inflation while rising incomes have allowed retail customers to buy the metal, according to Ong.

She, however, noted that price volatility would increase as prices rose.

Meanwhile, a Singapore-based gold trader attached to a bank said gold prices would likely rise to US$1,615 in the next one to two weeks before the market rebalanced from the price rise.

“Funds are flowing to gold from securities due to the volatility of the US and European markets but may return to the US market as second-quarter financial results may beat expectations,” he said.

According to Brad Durham, an EPFR managing director, there was fear in the markets of a potential downgrade of US debt and more negative news from the eurozone.

“It was a good, old-fashioned flight-to-safety trade,” he said in a Bloomberg report.

Data from the US Commodity Futures Trading Commission also showed hedge funds and other money managers lifted their net-long gold position by 25%, which is the biggest jump since the week ended Sept 8, 2009.

The Gold Market Down, US Dolar Rose.

The gold market continue down because the strength of US dolar. Sentiment on the dollar had been negative for many weeks on concerns over the U.S. economy and expectations for higher interest rates in Europe and the UK, pushing bearish positions on the currency to stretched levels.

But the outcome of three central bank meetings from the
• Federal Reserve;
• Bank of England and;
• European Central Bank
offered few surprises, giving dealers little incentive to further sell the dollar.

The gold market may raise after the investor had taken their profit from US Dolar. Maybe on 12 or 19 May 2007 will raise.

Source from : Reuters.UK , NS Futures