Gold Price Forecasts: Joni Teves

The London Bullion Market Association (LBMA) asked 23 Gold analysts from around the world for their predictions on the average, high and low price range for the year ahead for Gold. Analysts who contributed to the Survey were invited to identify the top five drivers likely to influence the gold price in 2017. The top two drivers were the US dollar and US real interest rates, followed by demand in China and India, globaal political events and President Trump’s fiscal and International policies. Gold Stock News presents what the Analysts forecast for Gold in 2017.

 

Joni Teves

UBS Limited, London

Gold: Range: $1,150 – $1,450

Average: $1,350

Joni Teves finished first for her forecasts for both Gold and Silver in the 2016 Forecast Survey.

We think gold allocation within a portfolio is warranted given a relatively benign rate environment, modest growth acceleration and elevated macro risks. We think further gains in gold are likely to be driven by a continuation of strategic portfolio allocation from a diverse set of investors. We’ve moderated our view to reflect the move in rates in the past few months and the greater downside risks ahead amid the potential for expansionary fiscal policy in the US to push growth and real yields sustainably higher. However, we think it’s premature to call for a regime change. There’s still a lot of uncertainty around this and much is required to overcome the environment of low rates and tenuous growth.

In terms of gold’s supply/demand fundamentals, we think these are broadly balanced, yet probably not strong enough to provide the same support as in 2013 if the market comes under similar pressure. We are more concerned about demand rather than supply – physical offtake has been weak and although there have been indications of resilience in core demand in key markets such as China and India, local policy developments could present some downside risks for physical demand up ahead. Ultimately, we think gold remains under-owned and macro conditions should continue encourage even broader participation in the gold market.

Looking ahead, we will be watching factors that affect real rates. A key focus right now is US fiscal policy and the impact on growth and inflation. Monetary policy at the Fed and other key central banks, nominal yields, oil and commodity prices are other factors to watch. We will also monitor cross-asset correlations, as well as trends in physical markets by looking at trade data, differentials between local and international gold prices, changes in the loco swap rate between Zurich and London, scrap flows and producer hedging activity.

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