Gold May Gain as Europe’s Debt Crisis Spurs Demand, Survey Shows

http://www.bloomberg.com/news/2011-05-26/gold-may-gain-as-europe-s-debt-crisis-spurs-demand-survey-shows.htmlBy Nicholas Larkin - May 27, 2011 7:01 AM GMT+0800

Gold may gain as concern about Europe’s debt crisis boosts demand for the metal as a protection of wealth, a survey found.

Seventeen of 19 traders, investors and analysts surveyed by Bloomberg, or 89 percent, said bullion will rise next week. One predicted lower prices and one was neutral. Gold for August delivery was up 0.8 percent for this week at $1,520.40 an ounce by 10:24 a.m. yesterday on the Comex in New York. It reached a record of $1,577.40 on May 2.

European policy makers are seeking ways to restore investor confidence on increasing concern that Greece won’t be able to repay its debts after last year’s 110 billion euro ($155 billion) bailout. The region’s crisis helped drive gold priced in euros and British pounds to records this week.

“Euro zone debt concerns are now front and center,” said Edel Tully, a London-based analyst at UBS AG in London. “Gold should remain supported in the near term.”

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 May 20.

The weekly gold survey, which started seven years ago, has forecast prices accurately in 209 of 364 weeks, or 57 percent of the time.

This week’s survey results: Bullish: 17 Bearish: 1 Neutral: 1

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

To contact the editor responsible for this story: Claudia Carpenter atccarpenter2@bloomberg.net.

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