Gold May Advance as Price Decline Spurs Buying, Survey Shows

July 9 (Bloomberg) -- Gold may advance on speculation that the metal’s drop to the lowest level in more than six weeks will prompt some investors to increase holdings, a survey found.

Thirteen of 20 traders, investors and analysts surveyed by Bloomberg, or 65 percent, said bullion will climb next week. Four forecast lower prices and three were neutral. Gold for delivery in August was down 1.5 percent for this week at $1,189.50 an ounce at 11 a.m. yesterday on the Comex in New York. It reached a record $1,266.50 on June 21.

Gold slipped on July 7 to $1,185 an ounce, the lowest price since May 24, and is heading for a third weekly decline. The metal gained this year as investors sought to shield their wealth from financial turbulence in Europe and on concern the global recovery may slow. The European Central Bank yesterday left its main interest rate unchanged at a record low 1 percent and the Bank of England kept its rate at 0.5 percent.

“Many traders and investors who have been on the sidelines in recent weeks see the present selloff as a buying opportunity,” analysts at Dublin-based broker GoldCore Ltd. said in a report. “Until savers and bondholders are compensated for considerable risk with higher yields, gold is likely to remain in a secular bull market.”

The red bars on the attached chart are derived by subtracting bearish forecasts from bullish estimates, with readings below zero signaling that most respondents expect a decline. The green line shows the gold price. The data shown are as of July 2.

The weekly gold survey that started six years ago has forecast prices accurately in 182 of 318 weeks, or 57 percent of the time.