Gold May Rebound After Plunge From Record Price, Survey ShowsNicholas Larkin
Gold may rebound after sliding more than $175 an ounce from a record as investors buy the metal on concern about a slowing economy and sovereign debts, a survey found.
Thirteen of 26 traders, investors and analysts surveyed by Bloomberg, or 50 percent, said bullion will rise next week. Eight predicted a drop and five were neutral. Gold for December delivery was down 5.9 percent for this week at $1,742 an ounce by 11:45 a.m. yesterday on the Comex in New York after reaching an all-time high of $1,917.90 on Aug. 23.
Gold fell $149.90 from the Aug. 22 close, set for the biggest three-day drop since January 1980. Prices slumped as U.S. durable-goods and home-price reports beat analyst estimates and CME Group Inc. raised margins on futures contracts. Gold futures’ 10-day historical volatility jumped to 41 percent, the highest level since March 2009, Bloomberg data show.
“Once volatility settles, we think there will be willing buyers in the short term,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “The situation in the euro zone, where peripheral sovereign yields remain elevated, has yet to improve,” and low interest rates will support gold, he said.
The Federal Reserve has taken the unprecedented step of saying it will keep borrowing costs near zero at least through mid-2013 to support the economy. Fed Chairman Ben S. Bernanke will give a speech today at an annual symposium in Jackson Hole, Wyoming, amid speculation a slowing U.S. economy and Europe’s debt crisis will hobble global growth. A year ago, he hinted at a second round of asset purchases to stimulate the U.S. economy.
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 Aug. 19.
The weekly gold survey, which started seven years ago, has forecast prices accurately in 218 of 377 weeks, or 58 percent of the time.
This week’s survey results: Bullish: 13 Bearish: 8 Neutral: 5
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