Gold Prices Are Looking At Highs Of $1,440 In 2018 - MKS
(Kitco News) - After recovering in 2017, gold prices are in for further gains this year, with the potential to hit $1,440 an ounce, said MKS PAMP in its annual outlook.
“As the demand is set to improve, the supply side will remain under pressure. This combined with ongoing geopolitical tensions and the official sector expected to be a net buyer prompts us to set the yearly average at 1365.00 USD/oz,” said Frederic Panizzutti, MKS PAMP’s managing director of the Dubai office.
The outlook noted that 2018 will likely see the high of $1,440 an ounce and the low of $1,220 an ounce. February gold futures last traded at $1,329.90 an ounce, down 0.69% on the day.
The key drivers for gold throughout the year will be monetary policy tightening by the Federal Reserve and the introduction of the U.S. corporate tax cut.
But, which way those items will impact gold is unclear at this point, Panizzutti pointed out.
“On one side of the argument, there is a general expectation for a 50 bp FED interest rates hike and the recent U.S. corporate tax cut which in theory could be in favor of a stronger USD on the back of assets repatriation,” he said. “On the other side, the tax cut could result in a lower U.S. treasury income and logically a widening budget deficit, putting pressure on the USD.”
Gold could also benefit from a major correction in global stock markets. On top of that, jewelry and industrial demand are supportive of higher gold prices, as both sectors are expected to grow on improving global growth, the outlook added.
The yellow metal has started out the year on a strong footing, with spot gold last trading at a key level of $1,329.90, up 0.24% on the day, according to Kitco.com.
Silver prices are projected to average $18.60 by hitting the high of $20.20 and the low of $16.20 in 2018. Spot silver on Kitco.com was last at $16.99, up 0.12% on the day.
The grey metal has been underperforming gold and is likely to stay on “its own path,” said Panizzutti.
“After having been somewhat neglected the past year we expect silver to attract more interest in 2018. Improving global growth will spur more demand from the industrial and jewelry sector. New technologies containing silver, even if marginal at this stage shall add to the demand,” he said.
By Anna GolubovaFor Kitco News
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