Survey Participants Split On Gold Direction Next Week

There’s an even split between survey participants in the weekly Kitco News Gold Survey, with half of participants bullish and half bearish or neutral.

In the Kitco News Gold Survey, out of 36 participants, 28 responded this week. Of those 28 participants, 14 see prices up, while nine see prices down and five see prices moving sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

Last week 61% of survey participants were bearish. As of noon EDT Friday, prices on the week were up about $22. If that holds, then most survey participants forecast incorrectly. Since May 13, 2011 when the survey started, participants have been right 45.2% of the time, as of May 17. 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.

Those who see higher prices said the market could continue its bounce from the $1,350s-an-ounce area, which is where gold prices found support for two days this week. At least one participant said the gold market might be back in a short-term uptrend. Prices could rise “up to (the) $1,500s following this week’s double-bottom and we’ll take it from there,” said Mark Leibovit, editor of the newsletter VR Gold Letter.

Several others are wary of the rise this week. Ira Epstein, of the Ira Epstein division of the Linn Group, is bearish on prices. “We’re now at the point of having to adjust to the eventuality of the Fed stopping its QE (quantitative easing) programs. Don’t think this won’t happen, it will. The question is when and that’s a very big unknown,” he said, referring to ideas in the markets that the Federal Reserve may pull back on its bond-buying program if U.S. economic data consistently improves.

Epstein counted off several other factors that aren’t supporting gold including no inflation, little concern over saber-rattling in the Mideast and North Korea, exchange-traded fund outflows, a slowly improving U.S. economy and a stronger stock market. “None of the above offers the rationale to think a bull market will develop anytime soon in gold,” he said, adding that “at best the gold market will most likely develop a trading range, one with downside bias. At worst, the market might break down towards the $1,000-1,200 on ounce level.”

Those who are neutral or see prices in a sideways range said prices seem to have formed a bottom with this week’s low, but technical-chart action has not convinced them the short-term trend is up.

Kitco Gold Survey

By Debbie Carlson of Kitco News dcarlson@kitco.com

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