July 8 (Bloomberg) -- Gold may gain as debt concerns in Europe and the U.S. spur demand for the metal as a protection of wealth, a survey found.
Fourteen of 18 traders, investors and analysts surveyed by Bloomberg, or 78 percent, said bullion will rise next week. Two predicted lower prices and two were neutral. Gold for August delivery was up 3 percent for this week at $1,527.80 an ounce by 11:39 a.m. yesterday on the Comex in New York. It reached a record $1,577.40 on May 2.
Gold rose to within 2.7 percent of its all-time high this week as Moody’s Investors Service cut Portugal’s credit rating to below investment grade, making it the second euro-area nation after Greece to be downgraded to so-called junk status by the company. President Barack Obama struggled to reach a compromise with opposition Republican lawmakers who are seeking spending cuts before they agree to raise the nation’s borrowing limit.
“Debt contagion seems to be back on the agenda, prompting diversification back into safe-havens,” said James Moore, an analyst at TheBullionDesk.com in London. “Data has shown a big reduction in fund longs in recent weeks and suggests scope for gains as players rebuild their exposure.”
Hedge-fund managers and other large speculators decreased their net-long position in New York gold futures by 18 percent in the week ended June 28, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, are down 23 percent since April.
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 July 1.
The weekly gold survey, which started seven years ago, has forecast prices accurately in 212 of 370 weeks, or 57 percent of the time.
This week’s survey results: Bullish: 14 Bearish: 2 Neutral: 2
--With assistance from Jae Hur in Tokyo and Sungwoo Park in Seoul. Editors: John Deane, Sharon Lindores
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