Gold Prices Could Hit $1,500 An Ounce In 2018 - GFMS
(Kitco News)- Gold prices are starting the new year in stellar fashionand investors should see further gains throughout the year, according toanalysts at GFMS Thomson Reuters.
In its fourth quarter 2017 Gold Survey, publishedThursday, the research team said that they could see prices rallying to $1,500an ounce at some point in 2018 with gold averaging the year at $1,360 an ounce.
“We believe that the geopolitical climate and equitymarkets will continue to support gold’s role as a risk hedge,” they said in itsreport. “Our forecast discounts three Fed rate hikes, although a potentialoverheating from the effect of the new tax reform could lead to more aggressivetightening, limiting gold’s upside.”
GFMS’s outlook comes as gold prices pushed to a 1.5-yearhigh on the back of a weaker U.S. dollar. The U.S. Dollar Index fell to itslowest level since December 2014 after U.S. Secretary Treasurer said that aweaker U.S. dollar is “good” for the U.S. economy.
February gold futures last traded at $1,363.20 an ounce,up 0.51% on the day.
Looking ahead, GFMS said that the U.S. central bankinterest rates are expected to have the biggest impact on gold prices.
“A continuation of U.S. monetary policy tightening willundoubtedly weigh on gold, and the rest of precious metals for that matter,however the fact of tightening itself has long been absorbed by the markets andit is the tone of future meetings and conferences and the pace of rateincreases that will play a more pivotal role,” the analysts said.
“Should the Fed appear more concerned about tepidinflation and take on a more gradual path of rate increases, the yellow metalis likely to benefit. On the other hand, a bolder approach to tightening couldpresent a bigger drag for the precious metal,” the report added.
When discussing the past year, GFMS said that physicalgold demand totaled 3,932 tonnes, up more than 10.5% from 3,557 tonnes ofphysical gold consumed in 2016. At the same time, global gold supply totaled4,409 tonnes, down more than 3.5% from 4,572 tonnes of gold in 2016.
By Neils ChristensenFor Kitco News
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