Gold Prices may rise for third week according to survey

By Finfacts Team –
Gold prices may rise for a third week on expectations a drop in the dollar will prompt inflation, boosting demand for the precious metal as a hedge, a survey conducted by Bloomberg revealed today.
The survey of 48 people included traders, investors and analysts.


Thirty-six respondents surveyed from Melbourne to New York on Feb. 17 and Feb. 18 advised buying gold, the most bullish sentiment in the survey since April 30. Some investors buy gold when inflation erodes the value of assets such as bonds or stocks. Five participants recommended investors sell their gold, and seven were neutral.
Gold, which is sold in dollars, rose 1.5 percent in New York last week as declines in the value of the dollar against the euro boosted the metal’s appeal as an alternative asset. The dollar and bonds fell on Feb. 18 after the U.S. Labor Department reported the biggest surge in producer prices since 1998.
Gold futures for April delivery rose $6.40 to $428.40 an ounce last week on the Comex division of the New York Mercantile Exchange, after gaining 1.5 percent the previous week. A futures contract is an obligation to buy or sell a commodity at a set price by a specific date. Trading in New York today is closed for the U.S. Presidents Day holiday.
“This may be the start of a move back toward $450 over the next few months,” said Daniel Hynes, an analyst at Australia & New Zealand Banking Group in Melbourne. Gold reached a 16-year high of $458.70 on Dec. 2.
In London, gold for immediate delivery was down 51 cents, or 0.1 percent, to $426.905 at 7:50 a.m.
According to Bloomberg the majority of gold investors and analysts have correctly forecast the direction of gold prices in 26 of the 43 weeks since the survey began, or 60 percent of the time.
“Inflation makes the dollar worth less, so gold will continue to rise if inflation increases,” said Stuart Flerlage, managing principal of Brownstone Advisors LLC, a New York-based investment company that manages about $100 million of futures, including gold.
Last week Federal Reserve Chairman Alan Greenspan suggested the central bank will keep boosting interest rates to curb inflation and bolster the dollar, spurring a drop in gold for the first trading session in six. Greenspan told the House Financial Services Committee that rates still are “fairly low” even after six quarter-point increases since June.
Source: FinFacts

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