Why Analysts Are Bullish on Second-Half Outlook for Gold



Median gold forecast

Looking at Wall Street analysts’ views can help you 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 Kinross Gold (KGC), Eldorado Gold (EGO), and Gold Fields (GFI). In this article, we’ll see analysts’ recent changes to their outlook for gold.

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Goldman Sachs increasingly bullish on gold

Goldman Sachs (GS) has recently increased its gold price forecasts. It raised its three-month, six-month, and 12-month targets for gold from $1,200, $1,180, and $1,150 per ounce, respectively, to $1,260, $1,261, and $1,250 per ounce, respectively. GS believes that while the rising real rates from the Fed might put pressure on gold, it will be offset by the following three factors:

  • lower expected returns on US equities (DIA) (DOW)
  • income acceleration in emerging markets to support gold prices
  • expected gold mine supply peaking in 2017

Citigroup: Gold’s downtrend running out of steam

After gold fell following a heavy volume flash crash, Citigroup (C) commented that gold is testing a strong area of support technically. It also added that the triple weekly momentum divergence for gold suggests that the downtrend in gold is running out of steam.

ANZ (Australia and New Zealand Banking Group) analysts also believe that the outlook for gold is bright despite the rising interest rates. They contend that “if the US political situation worsens this year, there is a possibility gold prices will breakthrough US$1300/oz.” It also sees emerging markets’ physical demand as another strong driver for gold prices.

ABN Amro also concedes that despite the current volatility, the long-term trend for gold seems to be bright. It forecasts an average gold price of $1,250 per ounce in 2Q17 and $1,288 per ounce by the end of 2017. It predicts an even higher gold price average of $1,400 per ounce in 2018.


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