Gold May Gain on Unrest, European Debt Concern, Survey Shows

11 March 2011  Bloomberg.com

Gold may gain as concern about unrest in North Africa and the Middle East and Europe’s debt crisis boost the metal’s appeal as an alternative investment, a survey found.

Ten of 16 traders, investors and analysts surveyed by Bloomberg, or 63 percent, said bullion will rise next week. Four predicted lower prices and two were neutral. Gold for April delivery was down 1.5 percent for this week at $1,407.50 an ounce at 11:30 a.m. yesterday on the Comex in New York after reaching a record $1,445.70 on March 7.

Muammar Qaddafi’s forces yesterday resumed air strikes on oil hubs in the central area of Libya’s coastline. In Saudi Arabia, websites have called for a “Day of Rage” today, Human Rights Watch said. Moody’s Investors Service this week cut credit ratings for Spain and Greece. European Union leaders meet today to discuss tackling the region’s debt crisis.

“The likelihood of continuing geopolitical tension in Libya, North Africa and the Middle East and the continuing euro- zone sovereign-debt crisis are a toxic cocktail likely to result in higher gold prices,” 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 March 4.

The weekly gold survey that started more than six years ago has forecast prices accurately in 202 of 353 weeks, or 57 percent of the time.