Bloomberg Survey Finds Analysts Bullish on Gold (GLD)

You wouldn’t know it looking at gold prices down more than 2.5 percent on Friday but a Bloomberg survey found that gold analysts are more bullish on gold than they’ve been in a month.

The Bloomberg survey found that 14 analysts expected the price of gold to rise next week while 10 were bearish and three, neutral. That represents the largest amount of good bulls since June 7. What has these analysts so bullish?

First, there are early signs of possible turmoil in the eurozone. Earlier this week, two Portuguese ministers resigned which pushed borrowing costs to their highest level in seven months. Then, there is the war of words between EU officials and Greece as it becomes clear that Greece will be unable to meet targets for reforming its public sector.

EU officials now have to decide if they will unlock a further 8.1 billion euros in aid for the country. Greece countered that the targets were unrealistic. Any disruption in the fragile EU recovery efforts is seen as an upside catalyst for the precious metal.

Next, following the recent sell off, physical demand has soared. Turkey, the fourth-largest consumer, has seen imports expand to a 4 ½ year high and gold dealers are reporting that demand is outpacing supply. When goal sold off earlier in the year, strong physical demand helped to stage a short term recovery that traders are counting on again.

Related: June Non-Farm Payrolls Blow Away Estimates, Boosted By Summer and Part-Time Jobs

Dennis Gartman told CNBC’s Mandy Drury, “After a year and a half of relentless gold selling, earlier this week, I turned bullish for the first time in a long while. I’m bullish of gold but I’m not a true believer.”

He went on to say that he believes the worst is over for the metal and while he thinks of it as no more than another currency to trade, he believes there’s upside to be had.

However, David Darst, Chief Investment Strategist for Morgan Stanley (NYSE: MS) said, “Gold is like religion. You believe in religion or you don’t believe in religion. And that’s one of the things. Gold is down because three things that are up: interest rates are up, stocks are up, and the dollar is up.”

What’s causing Friday’s selloff? Markets saw an uptick in the selling pressure when a positive jobs report was announced at 8:30 EDT but accommodative comments from the ECB on July 4 served to stage the beginning of the selloff.

Disclosure: At the time of this writing, Tim Parker was long gold.