Number of Gold Bulls Rising

Gold traders are the most bullish since before the bear market began two months ago after a retreat in equities from an almost five-year high and a weakening dollar spurred demand for bullion.

Nineteen analysts surveyed by Bloomberg expect prices to rise next week, with eight bearish and six neutral, the largest proportion of bulls since March 22. Global stocks that rose to the highest since June 2008 on May 22 reached a six-week low yesterday amid mounting speculation about whether the Federal Reserve will taper stimulus. The U.S. Dollar Index, a measure against six currencies, slipped to the lowest in three months.

Weekly sales of gold held through exchange-traded products are poised for the lowest level since March after the value of holdings slumped by more than $45 billion this year. The start of the bear market in April spurred a surge in demand for coins and jewelry, with the U.S. Mint saying June 5 that its sales may be a record this year. Demand has been so great in India, the biggest buyer, that the government is curbing imports to ease the nation’s current-account deficit.

“The concern is that we see stock markets come under pressure and then see an increase in risk aversion,” said Mark O’Byrne, the executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores bullion coins and bars. “Gold’s already had a correction, so people see value in the gold market. There has been significant technical damage done to gold and therefore it will take a period of time to recover.”

Bloomberg

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