Still, not everyone is convinced, given the big volatility in the market and gold’s difficulty in sustaining moves over $1,900 an ounce.
In the Kitco News Gold Survey, out of 34 participants, 21 responded this week. Of those 21 participants, nine see prices up, while six see prices down, and six see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts.
Sterling Smith, commodity trading adviser and market analyst with Country Hedging, said he’s bullish because of the mounting problems in Greece, which is teetering on default. He said credit default swaps on Greek debt are at 91% chance of a default and one-year yields are now near 93%.
“I think it is not out of the question that an actual default from Greece occurs next week. The market has basically defaulted them already,” Smith said.
President Obama laid out a speech on Thursday outlining a roughly $450 billion plan to boost jobs, but faces stiff Republican opposition, so the U.S. political tensions also remain supportive for gold’s price, several said.
Yet not everyone is convinced gold is going up. Some said the negative sentiment toward the U.S. economy may have been priced in at current levels. Several added the market needs to build a base after two attempts to stay over $1,900, plus the Federal Open Market Committee meeting on Sept. 21-22 could keep traders sidelined. That doesn’t mean that volatility is going away, however.
Those who see weaker prices near-term point out that despite gold’s moves to new highs, the rally hasn’t been accompanied by rising open interest in the futures market nor a significant increase in ownership in the physically backed exchange-traded funds. Further, others said, the dollar has moved up, putting pressure on dollar-denominated gold.
Sources : http://www.kitco.com/kgs/goldsurvey_september09.2011.html
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