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Metals Focus sees gold climbing to $1450/oz this year

JOHANNESBURG (miningweekly.com) – Although facing a number of challenges, global market conditions are expected to become positive for gold this year, with the precious metal potentially testing $1 450/oz before the end of 2018, consultancy Metals Focus says in its latest gold market report.

The ‘Gold Focus 2018’ report, which was released on Wednesday, states that prices will benefit from investor rotation into gold, owing to equity market corrections and a low yield backdrop.

Following a positive sentiment in December, the report states that gold has moved sideways in a tight range since the beginning of 2018, as markets have lacked decisive triggers. Such range-bound conditions are forecast to also persist over the second quarter.

The consultancy notes that many of the headwinds that gold faced in 2017 have continued into 2018, and lists investors’ continued preference for equities, despite the volatility spikes that the industry has seen at times this year, together with rising bond yields as headwinds for gold prices. The recent resilience of the US dollar and ongoing rate hikes by the Fed are also negative for gold.

However, Metals Focus expects that conditions will become positive for the metal as the year progresses.

“Our view that prices will rise is based on our belief that the dollar will resume its secular downtrend. Real short-term rates will also stay negative for some time to come, while twin deficits in the US [fiscal and trade] will lower investor appetite for bonds and the yield curve may flatten further,” Metals Focus director Nikos Kavalis commented on Wednesday.

This, he added, coupled with the potential for a correction in equities, would benefit gold and although US interest rate increases might act as a headwind, their impact on the gold price would be limited as they were largely priced in.

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