Median gold forecast
Looking at Wall Street analysts’ views can help investors understand the reasons behind gold’s price outlook and the path that gold investments are likely to take. Gold investments include physical gold, ETFs such as the VanEck Vectors Gold Miners ETF (GDX), and equities such as Agnico Eagle Mines (AEM), Gold Fields (GFI), and New Gold (NGD).
Credit Suisse’s and UBS’s views
Credit Suisse (CS) analyst Anita Soni has a positive outlook for gold. She believes that US real interest rates could surprise to the downside, the US dollar may weaken, and central banks could take a dovish stand. These factors could boost gold prices to $1,400 per ounce by 4Q17.
While Credit Suisse maintained its bullish outlook on the metal, UBS lowered its price forecasts. It expects gold to test $1,200 per ounce or lower over the next three months. Its argument is based on the premise that investors underpriced the likelihood of two additional rate hikes this year. It also feels that political risks are fading.
RBC is “cautiously bullish” on gold. It expects gold prices to average $1,264 per ounce by 4Q17. As reported by Barron’s, RBC stated that “we think now is the opportune time to layer into risk overlays (a recommendation we have made numerous times) in our view. Why now? Firstly, correlations are zero to negative where it matters – equities, rates, and dollar. This is the primary pillar of gold’s diversification benefit, in our view. Secondly, 30-day volatility in gold has continued to fall, largely in line with other assets. While we do think that the market has suffered from a bit of whiplash given recent elections, political volatility, and questions of security, but we think the largest risk-adjusted worry in our view is around global trade in the coming years. Additionally, we remain cautiously bullish on gold through the balance of the year with our Q4 17 average price forecast of $1265/oz.”
Goldman Sachs analyst (GS) Max Layton, on the other hand, believes that gold could fall further, which may present an opportune time to add positions in the metal. As reported by Barron’s, Layton stated that “In the very near term we continue to expect that gold will trade moderately lower – our 3-month target is $1,200/oz, as a number of bearish catalysts have yet to fully play out. However clearly the upside to a near term short gold trade or near term producer hedging has diminished with the recent price declines.”