Gold May Climb Next Week as Price Drop Spurs Higher Demand, Survey Shows
Gold ingots at the Argor-Heraeus SA gold producing and refining plant in Mendrisio. Photographer: Adrian Moser/Bloomberg
Gold may advance on speculation that recent price declines will spur increased physical and investment demand, a survey found.
Nine of 22 traders, investors and analysts surveyed by Bloomberg, or 41 percent, said bullion will rise next week. Eight forecast lower prices and five were neutral. Gold for December delivery was down 2.1 percent this week at $1,166.60 an ounce at 11:11 a.m. yesterday on the Comex in New York.
The metal has dropped 7.9 percent since climbing to a record $1,266.50 on June 21. Prices on July 28 slipped to a 12- week low of $1,159.30 as holdings in the SPDR Gold Trust, the biggest gold-backed exchange-traded fund, dropped the most in more than two years. Physical demand for gold from India, China and the wider Asian region was “very visible” as prices declined this week, UBS AG said July 28.
“Although gold has fallen sharply from the highs reached in June we believe gold will still head higher,” said Walter de Wet, an analyst at Standard Bank Plc in London. “While we are seeing strong physical demand for gold already, we believe investment demand for gold will remain in place.”
Bullion has fallen from its high on reduced European financial turmoil and on signs the global economy is rebounding. The euro yesterday climbed to a 12-week high against the dollar, while the MSCI World Index of equities this week advanced to the highest level since May 14. Gold is up 6.4 percent this year.
The red bars on the attached chart are derived by subtracting bearish forecasts from bullish estimates, with readings below zero signaling that most respondents expect a decline. The green line shows the gold price. The data shown are as of July 23.
The weekly gold survey that started six years ago has forecast prices accurately in 183 of 321 weeks, or 57 percent of the time.
This week’s survey results: Bullish: 9 Bearish: 8 Neutral: 5
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net.
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