Gold May Gain on U.S., European Debt Concerns, Survey Shows

Gold may extend its climb to a record as debt concerns in the U.S. and Europe spur demand for the metal as a protection of wealth, a survey found.

Sixteen of 32 traders, investors and analysts surveyed by Bloomberg, or 50 percent, said bullion will rise next week. Nine predicted lower prices and seven were neutral. Gold for August delivery was up 0.5 percent for this week at $1,597.50 an ounce by 11:02 a.m. yesterday on the Comex in New York. It reached an all-time high of $1,610.70 on July 19.

Investors boosted holdings of the metal in exchange-traded products to a record 2,122.6 metric tons this week as European policy makers met for the second time in a month in a bid to calm Greece’s financial distress and inoculate Spain and Italy from contagion. Standard & Poor’s yesterday reiterated there’s a 50 percent chance of a U.S. ratings cut within three months.

“The primary driver is the debt crisis in the U.S. and the euro zone which is not going to go away anytime soon and poses the real risk of financial contagion,” said Mark O’Byrne, executive director of brokerage GoldCore Ltd. in Dublin. “Safe haven demand is due to concerns about global economic growth and deepening inflation.”

The attached chart tracks the results of the Bloomberg survey, with the red bars derived by subtracting bearish forecasts from bullish estimates. Readings below zero signal that most respondents expect a decline. The green line shows the gold price. The data are as of July 15.

The weekly gold survey, which started seven years ago, has forecast prices accurately in 214 of 372 weeks, or 58 percent of the time.

This week’s survey results: Bullish: 16 Bearish: 9 Neutral: 7

To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net