Friday November 11, 2011 12:14 PM
Continued uncertainty over the economic health of southern European countries is expected to support gold prices next week, with the majority of participants in the weekly Kitco News Gold Survey forecasting higher prices.
In the Kitco News Gold Survey, out of 34 participants, 22 responded this week. Of those 22 participants, 18 see prices up, while two see prices down and two see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts.
With the prime ministers of Greece and Italy resigning or planning to step down over their enormous debt problems and the possibility of the situation deteriorating, several participants said this could underscore gold’s safe-haven status.
Not everyone thinks Europe will be the main support for prices for gold as other factors might surface to underpin values.
Erica Rannestad, analyst at CPM Group, said prices might weaken initially as the eurozone concerns are less worrisome. But she said considering that December futures contracts will begin to roll to deferred months in the next few weeks and the expiration of December options contracts, these two considerations could ultimately push prices higher. “The nearing of the U.S. deficit cuts deadline on Nov. 23 also may boost prices, as uncertainty regarding the nature of these cuts mounts,” she said.
Those who see lower prices also said the weakness gold exhibited on Thursday did not bode well for the market in the short-term.
The participants who see gold unchanged said the metal’s price needs to consolidate after the recent volatility before finding new direction.
By Debbie Carlson of Kitco News firstname.lastname@example.org