Jan 04, 2018

Gold Records Highest Annual Increase Since 2010, Outlook Remains Firm for 2018 Say Analysts

Gold prices ended 2017 over the $ 1,300 per ounce level registering a 13% rise, the highest annual gain since the 29.5% jump in 2010, and the second successive year that prices of the yellow metal have seen positive growth. The trend was largely driven by a weaker dollar, which recorded its poorest annnual performance since 2003, as gold continued to attract investor interest despite the surge in stock markets, multiple Fed rate hikes and positive economic data from the world’s largest economy.

Analysts believe that the dollar will continue to demonstrate weakness in the new year and metal prices will continue to remain firm in 2018.  Precious metals consultancy Metals Focus writes that the Fed will “maintain a relatively dovish stance” and that the US currency will also be impacted by “improving economic growth outside the US, for example in Europe”. It concludes that “further upside” should be expected this year for gold.

Others broadly concur. An writer for goldseek.com notes that “It is safe to say that in 2018 gold will be sent significantly higher thanks to ongoing US dollar weakness, higher debt and deficits,  stronger growth combined with potential wage inflation, coming together in a perfect storm with geopolitical risks”.

Many point out that the surge in stock markets, and the steep rise in investor interest in the new cryptocurreny, Bitcoins, are leading to a bubble-like situation, and corrections are likely to emerge in both markets. Both these events, when they occur will also provide a favourable boost to safe haven interest in gold.

Some market observers believe that the yellow metal price will cross the US$ 1,500 level during the year, while others believe that while prices will remain firm in the prevailing uncertain political and economic scenario, but, only some major, and currently unforeseeable event, will lead to a significant rise in prices.

Among other metals, silver is likely to outperform gold in 2017, analysts say, while platinum’s poor fundamentals with a possible increase in the physical oversupply, will cap potential gains, and palladium will experience a period of consolidation in 2018.