Sunday, January 19, 2014

Higher Gold Prices Forecast For Next Week

Kitco Gold Survey

A majority of survey participants in the weekly Kitco News Gold Survey expect higher prices next week as they said they believe prices will try to sustainably break through the stubborn resistance at $1,250 an ounce.

In the Kitco News Gold Survey, out of 33 participants, 27 responded this week. Sixteen see prices up, while eight see prices down and three see prices trading sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

Last week participants were bullish. As of noon EST, February Comex gold prices were up $6.40 on the week.

Several survey participants who see higher prices said they expect improving technical charts may support the yellow metal.

“Gold has done a good job of confounding and confusing the consensus, who were nearly all convinced at year-end gold had only one way it could go: lower. But (Comex gold futures) open interest is up (over) 30,000 contracts, accompanying the rally, and technically it appears to have enough momentum to reach the $1,275 area … (around the) 38% Fibonacci retracement of the December low and August high. I expect that can be achieved next week,” said Ken Morrison, editor of Morrison on the Markets.

Adrian Day, chairman and chief executive officer, Adrian Day Asset Management, pointed to other reasons for gold’s strength next week.

“(The) recent jobs report, notwithstanding distortions that could have resulted from the extraordinary December weather, was weak, showing more people leaving the job market -- and thereby helping the unemployment number.  We suspect that the expectations for monthly reductions in bond buying will prove to be overly optimistic; any tapering of the taper would boost gold,” Day said.

Those who see weaker prices next week think the current rally in gold won’t last, and at least one participant, Kevin Grady, president, Phoenix Futures and Options, gave a different view about the rising open interest in gold futures.

“I think gold will be lower next week. The open interest in gold jumped by 32,000 contracts over the past week. I believe those are passive longs entering the market. Even with those new positions gold managed only a meager rally. I believe that once this buying subsides … gold will continue on its downward trend,” Grady said.

Kitco Gold Survey

By Debbie Carlson of Kitco News;

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