Survey Participants Torn Over Gold Market Direction For Next Week

(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.

Kitco Gold Survey

By Debbie Carlson of Kitco News dcarlson@kitco.com

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