The recent 16th LBMA (London Bullion Market Association) conference held in Vienna, Austria, was attended by senior representatives from all sectors of the precious metals market. The average gold price prediction for the next year from the audience was $1159.80 per ounce. As the projections are lower than the current metal prices, the outlook for gold seems to be bearish.
Gold futures on COMEX, a division of the NYMEX, have seen yellow metal lose 0.78% on a YTD (year-to-date) basis. There has been a substantial gain in the price of gold after it dropped to approximately $1080 per ounce in August 2015. The current gold price of $1177 per ounce has increased almost $100 per ounce. Above is a price chart for gold for 2015.
Gold sign relief
The first day at the conference in Vienna started with a hugely negative outlook for the precious metals. However, the end results do not look as dim as was predicted. On the first day, rumors filled the air that the yellow precious metals could drop below the $1000 mark in the coming year or perhaps even lower, to $800.
Similarly, predictions for platinum were not as bad as expected. End figures showed $1072 per ounce for platinum. The number is slightly above the current price of $1025 per ounce.
The Volkswagen scandal caused platinum prices to fall below the $900 mark. Consensus figures are comparatively bullish and may free platinum from further downgrading. This appears to be a small sign of relief for gold and platinum.
Miners may be affected
Given predictions for the comparatively expensive precious metals gold and platinum, mining stocks may be relatively affected. Mining ETFs such as the SPDR Gold Shares ETF (GLD) and the SPDR S&P Metals and Mining ETF (XME) may be negatively impacted by the downturn in gold prices.
The returns of these ETFs will likely follow the returns in gold itself. Mining companies such as Sibanye Gold (SBGL), Royal Gold (RGLD), and Barrick Gold (ABX) may witness falls in their share prices owing to falling gold prices. These three stocks together determine 13.5% of the price movements in the VanEck Vectors Gold Miners ETF (GDX).
The LBMA’s predictions for silver and palladium prices will be discussed in the next article.