By Nicholas Larkin
Oct. 16 (Bloomberg) -- Gold may decline as a rally to a record encourages some investors to sell the precious metal and erodes jewelry demand, a survey showed.
Nine of 16 traders, investors and analysts surveyed by Bloomberg, or 56 percent, said bullion would fall next week. Five forecast higher prices and two were neutral. Gold for delivery in December was up 1 percent this week at $1,059.20 an ounce by noon yesterday in New York. The metal reached a record $1,072 on Oct. 14.
Gold futures have climbed 19 percent this year and are headed for a ninth consecutive annual gain, while the dollar is trading near the lowest level in 14 months against a basket of six major currencies. The 14-day relative strength index for gold futures yesterday climbed above 70, a level viewed by some investors as a signal of an impending retreat.
“A weak dollar, rising equities and risk appetite are supportive, but I think gold is looking fatigued and vulnerable to a correction,” James Moore, an analyst at TheBullionDesk.com in London, said in an e-mail.
Bullion futures have gained in seven of the past eight weeks. The October-December period is typically the busiest season for jewelry sales in India, spurred by the wedding season and this weekend’s Diwali holiday.
“We are fearful that far, far too many people are involved with this market and that a correction of some consequence is now upon us,” wrote Dennis Gartman, an economist and editor of the daily U.S.-based Gartman Letter. “Those who had been hoping to see material Indian buying of gold ahead of and during the Diwali festival may find their hopes dashed.”
The weekly gold survey has forecast prices accurately in 164 of 283 weeks, or 58 percent of the time.
This week’s survey results: Bullish: 5, Bearish: 9, Neutral: 2
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
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