UBS raised its forecast for gold prices after the Federal Reserve’s March 2018 meeting. In a note, the firm stated, “The Federal Reserve’s March meeting emerged as a turning point for gold.” UBS raised its three-month forecast range to $1,300–$1,400 per ounce, and it raised its six-month and 12-month target ranges to $1,375 per ounce, respectively.
TD Securities (TD) had previously forecast a gold price target of $1,380 per ounce on the back of the US dollar’s strength reversal and a more dovish Fed. TD Securities noted in a March 2018 report that after trading in a very narrow zone of $1,302–$1,340 per ounce for many weeks, gold prices seem to challenge January’s high of $1,366 per ounce.
In a Commodities Weekly report, TD’s analysts noted on March 26, 2018, “Given that geopolitical risks sent stocks sharply lower, while bonds and the Japanese yen received a bid as short positions were pared back, it is likely that investors may want to buy gold and silver as a hedge.”
Gold and gold miners
A positive return for gold prices could pose a significant impact on gold miners. Because 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 13.0%, and the gold miners’ index gained 11.1%. Miners (GDX)(GDXJ) such as Eldorado Gold (EGO), Tahoe Resources (TAHO), Barrick Gold (ABX), and Goldcorp (GG) reported negative returns.