Gold may see a gain as the European Union debt crisis continues on because many investors will be going to the metal as a protection of their wealth. According to a study fifteen of twenty-three traders said gold will rise next.
By Nicholas Larkin
Jun 16, 2011 4:01 PM MT
Gold may gain as concern about Europe’s debt crisis spurs demand for the metal as a protection of wealth, a survey found.
Fifteen of 23 traders, investors and analysts surveyed by Bloomberg, or 65 percent, said bullion will rise next week. Five predicted lower prices and three were neutral. Gold for August delivery was down 0.1 percent for this week at $1,527.30 an ounce by 11:34 a.m. yesterday on the Comex in New York. It reached a record $1,577.40 on May 2.
The cost of insuring against default on Greek, Irish and Portuguese government debt surged to records yesterday, CMA prices showed. German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet today in Berlin, with pressure increasing for the leaders to reach an accord on a rescue package for Greece.
“Gold should continue to be purchased as the European sovereign debt crisis is deepening and appears to be reaching a dangerous denouement,” said Mark O’Byrne, executive director of brokerage GoldCore Ltd. in Dublin. Divisions “as to how to resolve the euro-zone debt crisis are creating a risk of contagion.”
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 June 10.
The weekly gold survey, which started seven years ago, has forecast prices accurately in 211 of 367 weeks, or 57 percent of the time.
This week’s survey results: Bullish: 15 Bearish: 5 Neutral: 3
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