Gold Traders Most Bullish in Three Weeks After Fed: Commodities
Sixteen analysts surveyed by Bloomberg expect prices to rise next week, five were bearish and five neutral. Gold jumped 4.1 percent on Sept. 18, the most in 15 months, after the U.S. central bank said it wants more evidence of an economic recovery before slowing its $85 billion-a-month of bond buying.
Gold is set for the first annual drop in 13 years as some investors lose faith in the metal as a store of value amid signs economies are strengthening. Fed Chairman Ben S. Bernanke surprised analysts who predicted a $5 billion cut, saying he was concerned that market interest rates, driven higher by his own suggestion he would scale back stimulus, would curb growth. As gold surged, the dollar slumped to a seven-month low.
“The Fed has realized that any attempt to reduce or eliminate quantitative easing will lead to a surge in interest rates,” said Jeff Sica, who helps oversee more than $1 billion as the president of Sica Wealth Management in Morristown, New Jersey. “There will be ongoing currency devaluation both in the U.S. and around the world. I anticipate significant fundamental strength in the price of gold in the near term.”