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What Investors Should Know about Gold's Key Drivers

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Part 6
What Investors Should Know about Gold's Key Drivers PART 6 OF 12

What Are Analysts Predicting for Gold Prices in 2017 and Beyond?

Goldman Sachs and ABN Amro

The Wall Street analyst outlook for gold prices helps us understand the path that gold investments could take going forward. Gold investments include physical gold, ETFs like the VanEck Vectors Gold Miners ETF (GDX), and equities like Franco Nevada (FNV), Eldorado Gold (EGO), Alamos Gold (AGI), and New Gold (NGD).

What Are Analysts Predicting for Gold Prices in 2017 and Beyond?

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Goldman Sachs (GS) has been fairly bearish about gold’s outlook. In September, the firm had maintained that gold will likely end the year at around $1,250 per ounce. More recently, its technical analysts said that they see gold prices falling to $1,100 per ounce after the prices were unable to test the key resistance at $1,380 per ounce.

ABN Amro Bank, on the other hand, is fairly bullish on gold’s outlook. It believes that gold should gain in the longer term mainly because the firm is negative on the US dollar in the long term. The analysts at ABN Amro forecast gold prices to reach $1,450 per ounce by the end of 2018. They believe gold will end 2017 at or near $1,300 per ounce.

BAML pares back estimates

Bank of America Merrill Lynch analysts have pared back their expectations for gold in the first quarter of 2018. While earlier they were predicting prices to average $1,400 per ounce, they now think prices will average ~$1,250 per ounce in 1Q18. The outlook for the second quarter has also been downgraded. The main reason the firm downgraded forecasts is the Federal Reserve’s stance on rate hikes amid the relatively weak inflationary environment. It believes that the higher bond yields and stronger US dollar could weigh on gold.

HSBC’s view on gold

According to Barrons’s blog, HSBC analyst James Steel feels that judging by the Fed’s minutes there is a chance that more Fed members could adopt the view that the “slowdown in inflation is less transitory than originally thought.” He also believes that gold prices are already factoring in some rate increases. If the actual increases are less than expected, gold prices might actually benefit.

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