Survey Participants Look For Lower Gold Prices Next Week.
Survey Participants Look For
Lower Gold Prices Next Week.
Friday
November 28, 2014 12:18 PM
(Kitco News) - Most participants in Kitco News’
weekly gold survey said they look for softer prices next week since a Swiss
gold referendum is expected to fail and the dollar has been strong while crude
oil has been soft.
In the Kitco
News Gold Survey, out of 36 participants, 19 responded this week -- fewer than
usual during the U.S. Thanksgiving week. Five see prices up, while 11 see
prices down and three see prices sideways or unchanged. Market participants
include bullion dealers, investment banks, futures traders and technical-chart
analysts.
Last week,
survey participants looked for prices to rise this week. Shortly before noon
EST, Comex gold for February delivery was down $18.60 for
the week. Prices were roughly flat as of Wednesday prior to the break for the
U.S. Thanksgiving weekend.
Choosing
gold’s direction next week might be even trickier than usual since one of the
major events that could dictate price action – the referendum in Switzerland on
central-bank gold holdings – occurs Sunday before traders even get to their
desks next week. Polls suggest the measure, which would mean increased Swiss
National Bank gold purchases if it passes, will fail. As a result, traders have
said a “no” vote is slightly bearish to neutral since this outcome is expected,
although a “yes” vote would boost prices.
Adrian Day,
president and chief executive officer of Adrian Day Asset Management, looks for
gold to be “more likely up than down.”
He further
explained: “The biggest determinant for next week may well be the Swiss
referendum, and of course we don’t know the result of that yet. If the vote is
positive, gold could be very strong, whereas a negative vote – other than an
unexpectedly low ‘yes’ vote – would not be very negative since the market is
not expecting a strong yes vote. So it’s an asymmetrical bet in my view.”
Colin
Cieszynski, senior market strategist at CMC Markets, looks for gold to ease
next week.
“I suspect
the ‘no’ side will win the Swiss referendum on Sunday and as we saw with the
oil collapse after the OPEC meeting, gold could be vulnerable on a ‘no’ vote,”
he said. “Also, the crude oil crash means lower inflation pressures for the
foreseeable future, reducing demand for gold as in inflation hedge. Finally, I
think the ECB (European Central Bank) is going to do nothing at its meeting
next week and punt any decision on more stimulus off to 2015, removing another
pillar of support from gold. It’s possible gold could retest the November lows
in the $1,130-$1,150 zone sometime in early December with a perfect storm
starting to swirl around gold.”
Added Peter
Hug, global trading director with Kitco Metals: “On the caveat that the Swiss
do not vote yes, I believe the market will be down next week. I believe the US$
(U.S. dollar) trend again re-asserts.”
Related Stories:
- Gold Would Get Boost From Surprise 'Yes' Swiss Vote; 'No' Vote Already Factored Into Prices
- India Drops 80:20 Gold Import Restrictions
Mark
Leibovit, editor of VR Gold Letter, described himself as “bullish, especially
if the Swiss gold referendum gets passed.”
He later
added: “If it obtains a majority ‘yes’ vote, it becomes law despite the
objections of bankers and politicians. This would deliver both a demand shock
and a supply shock. The gold market and central banks are whistling past this
graveyard. They may be in for a shock when the votes are counted.”
By Allen
Sykora of Kitco News; asykora@kitco.com
