Gold Price May Drop as Investors Sell Before Yearend, According to Survey By Nicholas Larkin - Dec 17, 2010

Bart Chilton

Gold may decline as some investors sell the metal before the end of the year to take advantage of a 10th consecutive annual gain, a survey found.

Twelve of 24 traders, investors and analysts surveyed by Bloomberg, or 50 percent, said the metal will fall next week. Eight predicted higher prices and four were neutral. Gold futures for February delivery were down 1.3 percent for this week at $1,366.40 an ounce at 10:45 a.m. yesterday on the Comex in New York.

Bullion climbed 25 percent this year as investors sought a protection of wealth from debt woes in Europe and as governments and central banks pumped money into the financial system to prop up economies. Gold futures declined for the first week in three last week after advancing to a record $1,432.50 on Dec. 7.

“The market seems more than willing to take profit in rallies rather than chase the price higher,” said Walter de Wet, an analyst at Standard Bank Plc in London. “Scrap and other selling are outpacing buying interest.”
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 Dec. 10.

The weekly gold survey that started six years ago has forecast prices accurately in 195 of 341 weeks, or 57 percent of the time.

This week’s survey results: Bullish: 8 Bearish: 12 Neutral: 4

To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net.

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