Though gold (NYSEARCA:GLD) prices have remained below $1,400 per ounce for weeks, analysts have noted a rash of buying at the metal’s lowest prices in years, which (along with other factors) is causing analysts to get bullish about gold for the first time in months. A survey by Bloomberg counted a heavy majority of analysts expecting gold prices to rise during trading this week.
A total of 19 analysts were bullish on gold, with only eight bears out of 33 surveyed. As investors see the Fed easing off on its stimulus efforts, the dollar took a plunge toward the end of the week. These signs are pointing analysts to the possibility of a rally for gold as other markets approach bubble territory. When confidence slips in paper currency, people tend to put more value in precious metals.
As for the physical supply of gold, buyers can’t snatch it up fast enough. The U.S. Mint expects to have its biggest year of sales after huge volumes of gold coins have been ordered, while Chinese buyers are paying higher prices per ounce of gold bullion and Indian collectors try to fight over a limited supply. India’s government raised tariffs on gold imports to lessen the impact on its trade deficit. Analysts see a sharp decline in imports ahead, due to the 33 percent increase in import duties. Still, many of the gold bears have refused to leave the room.
Warren Rogers, who manages funds at London’s Dual Asset, sees the trend continuing south. “You have the Fed telling you [Quantitative Easing] is over, you have a bull market in S&P… I think the broader path is quite down,” Rogers told Bloomberg. Other analysts and economics professors — notably, Nouriel Roubini – see gold headed as far down as $1,000 per ounce as economic conditions improve slightly worldwide.
Though a larger decline is possible, bullish analysts don’t see that happening in the coming weeks. The numbers haven’t been so weighted toward bulls since March 22. The thinking goes that gold has hit its bottom for the time being, and will see a rally, if only for the short term.