Friday, December 14, 2012

Analysis gold prices for next week december 17-21 2012

Analysis gold prices for next week december 17-21 2012 : The gold price has dropped for the third week running as investors head into equity markets in the hope the world economy will improve next year. Gold struggled to rise above $1,700 an ounce on Friday after an almost 1% decline on Thursday.

The move was driven by brighter news out of Asia, which traders hope will drive a global recovery next year. A snapshot of China's vast manufacturing sector underlined a brighter outlook for the economy in coming months, while a state-backed thinktank has forecast that China will grow by 8% next year – above the likely government target.

Traders are now getting into position for the new year with the view that equity markets will surge. Demand for gold – seen as a defensive investment amid falling equity markets – is therefore weakening.  The extent of the fall is exaggerated by year-end positioning. Where do you want to be for the beginning of next year? People have been looking at riskier markets like equity markets and thinking taking a defensive position in gold is not the best thing one can do."

Concerns about the US fiscal cliff, he said, have eased, with the majority of people expecting a resolution towards the end of the year or in the first week of January. "You can see [gold] easily rallying back, as we get closer to year-end, if nothing is done on the US fiscal cliff."

But the gold price is still 9% higher than it was at the start of the year, driven by uncertainty about the global economy and the extent of money printing undertaken by central banks across the globe.Printing money devalues the price of currencies. Because you can't print gold or debase it, the value of gold should go up. It's seen as a store of value.we expects the price of gold to recover again next year as central banks, such as the ECB, undertake more bond-buying operations to prop up their economies.

Gold’s sell-off on renewed concerns about the looming ‘fiscal cliff’ is overdone. Yes, a recession would be negative for gold, but the Fed’s continued commitment to easy money is the overwhelming driver for gold,

I am see still overall bearish on gold prices because the market hasn’t taken out $1,725, for next week he’s neutral on direction. “I am looking for a test of $1,675 next week but expect the market to hold. A close below $1,675 opens the door and paves the way for a move down to $1,650.

Kitco News Gold Survey
Opinions about the direction of gold prices next week are divided in the weekly Kitco News Gold Survey, with bulls outnumbering bears and those seeing sideways trading, but not enough of them to score over 50% of the survey.

In the Kitco News Gold Survey, out of 33 participants, 26 responded this week. Of those 26 participants, 12 see prices up, while five see prices down and nine are neutral or see prices moving sideways. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

Those who see higher prices said they expect gold will bounce off the lows established around November at $1,675 an ounce as they expect buying interest will materialize there. They remain bullish on gold even after the metal’s surprise sell-off after this week’s announcement by the Federal Open Market Committee to add monetary stimulus to the U.S. economy.

Participants who are neutral on prices or see sideways action said either they have moved to the sidelines on gold heading into the last full trading week of the year, waiting for more normal trading conditions to resume next year. Others said given the likelihood of lighter volume and no fresh information, prices are likely to trade between $1,675 and $1,725, with prices likely to hew closer to $1,700.

analysts surveyed by Bloomberg
Sixteen of 28 traders and analysts surveyed said gold would advance next week and nine were bearish. Bullion rose 8.5 percent to $1,696.75 an ounce in London this year. Holdings in gold-backed exchange-traded products reached a record 2,629.968 tons on Dec. 13, data compiled by Bloomberg show.

Gold is poised for a 12th consecutive annual gain as central banks from Europe to China pledge more steps to boost growth. The Federal Reserve said Dec. 12 it will expand stimulus by buying $45 billion a month of Treasury securities from January. Chairman Ben S. Bernanke said the latest measures won’t offset the effects of the so-called fiscal cliff of spending cuts and tax increases scheduled to start in January.

The S&P GSCI gauge of raw materials dropped 9.4 percent since reaching a five-month high on Sept. 14, and is heading for its worst performance since 2008. The Washington-based International Monetary Fund cut its 2013 growth forecast twice since July, to 3.6 percent.

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