Gold May Drop as Investors Sell on Rise to Record

Source:

"This market has risen too far, too fast."

Bloomberg

Gold may decline as some investors sell after the metal's rally to a record and as other commodities drop, a survey found.

Bloomberg surveyed 18 traders, investors and analysts and 8, or 44%, said bullion will fall next week. Seven predicted higher prices and three were neutral. Gold for June delivery was down 4.5% for this week at $1,485.70 an ounce by 11:30 a.m. yesterday on the Comex in New York. It reached a record $1,577.40 on May 2.

Bullion gained for six consecutive weeks as it advanced to a record on demand for a hedge against rising inflation and an alternative to a weakening dollar. Gold prices slipped this week as silver plunged after Comex owner CME Group Ltd. raised margin requirements and as industrial metals and crude oil declined.

"This market has risen too far, too fast," said Jim Pogoda, an investor in Summit, New Jersey, and a former precious-metals trader for Mitsubishi International Corp. "I think we'll get a more significant pullback over the next few weeks, as I expect many speculative longs that contributed to the frenzy to exit.

The Bloomberg survey by subtracting bearish forecasts from bullish estimates. Readings below zero signal that most respondents expect a decline as of April 29, 2011.

The weekly gold survey, which started almost seven years ago, has forecast prices accurately in 208 of 361 weeks, or 58% of the time.

This week's survey results: Bullish; 7 Bearish; 8 Neutral: 3."

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