Gold will likely build on last week's four-week high, reflecting expectations that the Federal Reserve will not cut bond purchases until well into 2014, though some warn there isn't enough momentum to lift prices above the late-August highs of $1,400, according to CNBC's latest market survey.
CNBC's latest poll of gold market sentiment showed 68 percent (15 out of 22 respondents) expect prices to gain this week, 18 percent (4 out of 22) predict price declines while 3 respondents sees prices trading around current levels.
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"With a lower dollar, Fed QE (Quantitative Easing) and markets at all-time highs, technicals are being backed up and strengthened by macro (factors)," said Matt Fanning, CIO and Fund Manager at Fanvestments in Providence, Rhode Island. "Technically, $1,333 was major resistance for a while and that was taken out."
Bullion recorded a 1.7 percent gain last week as it benefited from weaker-than-expected U.S. non-farm payrolls data, building the case for a delayed Fed taper.
The Fed may signal stimulus remains intact for longer at its two-day policy meeting this week. Market consensus points to the U.S. central bank cutting back bond purchases only in March 2014 after recent U.S. economic data missed forecasts and fears that the October numbers may be even worse due to the impact of the government shutdown.
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"Tapering this year is off the table," said Scott Carter, the chief executive officer of Los Angeles-based Lear Capital. "It's doubtful that we will see any tapering of bond purchases until much later in 2014. This should provide a tailwind for gold to move up in the coming months."
Gold bulls argue recent gains can be sustained by a weaker dollar and physical demand as the festive season in India - the world's largest consumer - approaches its peak next month although selling in exchange-traded gold back funds continues to underscore investors' faith in gold is fading.
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After a 12-year bull market, the metal has underperformed falling by more than 20 percent this year.
"We continue to see liquidation on the ETF side despite this recent take higher," said Mark Keenan,
Cross Commodity Research Strategist at Societe Generale told 'Squawk Box' on Friday. "Heading into the month of November, it's the peak month for the Indian wedding and festival gold buying period so we might get slightly higher numbers from these levels.
Judging by the historical performance of gold in past Novembers, "we can expect about a 3.8 percent rise in the price over this month," Keenan said. "We might see a little bit more strength from these numbers, but frankly anything approaching $1,400 will be very surprising."
Credit Suisse precious metals analysts led by Tom Kendall said in a report last week that the macro environment has not shifted enough for gold to challenge its late-August high above $1,400 though UBS commodity analysts disagreed.
"The shutdown showdown and the short-term punt of the budget fight to early 2014 delays in our view the Fed taper from December 2013 to March 2014," said UBS' Dominic Schnider and Giovanni Staunovo. Taper delays will fuel "weakness in the U.S. dollar and the subsequent strength in the gold price could run further in the coming weeks,"they said, adding that if the euro tested $1.40 against the dollar, that "would facilitate a gold price move above $1,400."
As a gauge of investor sentiment, holdings in the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Shares, fell 0.2 percent or 1.8 tons last Thursday, Reuters reported. An outflow of more than 10 tons occurred last Monday followed by an increase of six tons on Tuesday.
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Demand for gold coins issued by the U.S. Mint, however, jumped in October after the budget impasse hit confidence in the dollar, causing a scramble into hard assets.
"Current demand has exhausted existing supply which has led to a mini-surge in newly made American Eagle gold bullion coins," said Edmund Moy, Chief Strategist at Morgan Gold and a former director of the U.S. Mint. "October sales so far of 39,000 ounces have tripled from September sales of 13,000 ounces." This showed investors who previously questioned gold as a safe-haven are "rethinking their doubts."
— By CNBC's Sri Jegarajah. Follow him on Twitter