ICBC Standard Bank
While ICBC Standard Bank is concerned about gold correcting in the short term due to extremely long inventor positioning, it remains optimistic about its prospects overall in 2018. The bank believes that lower inflation should keep the Fed from raising rates aggressively, thereby supporting gold. It expects gold prices to average $1,312 per ounce in 2018.
TD Securities remains bullish on the Fed hiking rates in 2018. It believes that strong US economic growth should encourage the Fed to tighten more aggressively. According to Kitco News, TD Securities analyst Bart Melek said that under such a situation, gold prices might be stuck “waiting for better days.” He also said that traders may not see the same highs reached in 2017 until 2Q18.
Deutsche Bank and Bank of America Merrill Lynch
Deutsche Bank (DB) expects gold prices to average $1,283 per ounce in 2018. This forecast is based on four Fed rate hikes occurring and modest dollar weakness. The bank believes that gold prices should shrug off worries of a fundamental downside with an accommodative central bank policy.
Bank of America Merrill Lynch sees gold prices averaging $1,326 per ounce in 2018. While the bank sees US tax reform as a mixed bag for gold, it believes that rising inflation, a higher budget deficit, and a sustained drop in the US dollar would be supportive of gold prices.
A positive return for gold prices could impact gold miners in a big way, as miners are a leveraged play on gold. They tend to magnify gold’s gains or losses. Last year was an outlier in this context—gold prices rose by 13%, and the gold miners’ index gained 11.1%. Many miners (GDX) (GDXJ), including Eldorado Gold (EGO), Tahoe Resources (TAHO), Barrick Gold (ABX), and Goldcorp (GG), reported negative returns.