Gold may extend gains from a record as concern about debt and faster inflation spur demand for the metal as an alternative investment, a survey found.
Seventeen of 20 traders, investors and analysts surveyed by Bloomberg, or 85 percent, said bullion will rise next week. Two predicted lower prices and one was neutral. Gold for June delivery was up 1.2 percent for this week at $1,504.30 an ounce by 11:18 a.m. yesterday on the Comex in New York after reaching a record $1,506.20 earlier in the day.
“The issues driving gold such as inflation, euro zone debt and Middle East and North African unrest are not going to be solved overnight,” James Moore, an analyst at TheBullionDesk.com in London, said in an e-mail. It’s “unwise to buck the trend.”
Standard & Poor’s this week lowered its U.S. credit-rating outlook, citing the widening budget deficit and helping push the dollar to a 16-month low versus six major currencies. The European Central Bank this month raised interest rates from a record low as inflation quickened. Fighting in Libya and Japan’s nuclear crisis helped gold’s 5.8 percent increase this year.
“With market focus shifting from sovereign debt issues in the euro zone to sovereign debt issues in the U.S.,” the previous resistance level of $1,500 may become support, said Mark O’Byrne, executive director of brokerage GoldCore Ltd. in Dublin.
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 April 15.
The weekly gold survey started almost seven years ago and has forecast prices accurately in 206 of 359 weeks, or 57 percent of the time.
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