Friday July 5, 2013 12:04 PM
(Kitco News) - Analysts and traders who take part in the weekly
Kitco Gold Survey are mixed on their expectations for price
direction next week.
Participation was slightly lighter than normal in this week's
survey as traders took off on the Friday after the U.S. Fourth of
July holiday on Thursday, turning it into a four-day weekend.
Eighteen participants took part in this week's survey, with seven
seeing prices up, seven seeing prices down and four looking for
Market participants include bullion dealers, investment banks,
futures traders and technical-chart analysts.
Many of those looking for further weakness cited continuing
expectations for tapering of the Federal Reserve's bond-buying
program known as quantitative easing, along with further selling
and/or liquidation by funds.
"I expect the funds to make one last effort to drive down the
paper gold price and liberate some cash from ETFs (exchange-traded
funds) for equity bubble investment," said Bill Goldman of 3GF
Corp. "The commercials will probably absorb some of those sales on
their way to slowly taking a net-long position on their
Ultimately, however, he suggested the Fed may only trim bond
purchases by a "sliver." Treasury yields have been rising.
Eventually, higher interest rates and falling exports may mean "the
Fed will revert to more QE because monetizing debt is all they can
do unless they join the hard money chorus of 'austerity,' which is
fraught with political consequences."
Those looking for sideways to higher trade suggest the market
has already factored in much of expected FOMC tapering and may be
overextended to the downside, at least in the short term.
"I look for a wide range but think…we continue to consolidate,"
said Darin Newsom, DTN senior analyst. "Last week, we had the
August (Comex gold) contract in an oversold situation. This rally
in the U.S. dollar index could run out of gas and come to an end.
That could provide some support to gold. I think last week's low
will hold, but we could certainly drift down toward that low."
(Editor's note: Neils Christensen contributed to this
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By Allen Sykora of Kitco News; firstname.lastname@example.org