The price of gold and silver will finish the year 5.3% and 7.1% higher than the start of 2017, said analysts predicting a “bull market”.
Analysts from UBS, Societe Generale, Macquarie Bank and Nataxis among many others took part in the London Bullion Market Association’s (LBMA) annual competition to see which analyst comes closest with their prediction for precious metals.
Last year’s gold price winner was Joni Teves of UBS, who came closest to the actual price of $1,251 (€1,165). This year she made the most bullish prediction for an average price of $1,350 per troy ounce.
The average forecast taken from all the analysts’ predictions was $1,244 per ounce for gold, or a 5.3% increase on the current price of $1,181.
The LBMA said that this year would be unpredictable given the high degree of geopolitical uncertainty, with a more nationalistic US president, potentially a hard Brexit, and elections in France and Germany.
Greater uncertainty should prove positive for gold, as could higher inflation if the US administration adopts reflationary policies.
However, the LBMA also noted the downside risks for gold prices, which are the anticipated three US rate hikes in 2017, a stronger US currency and rising stock prices, and continued weak demand from China and India.
“One possibility is that 2017 will be last year on steroids – huge political risks, wobbly growth, the Fed foiled again,” said Matthew Turner, an analyst at Macquarie Bank.
Silver is subject to many of the same influences as gold. However, unlike gold, silver has an industrial use so a stronger economic outlook could boost demand for its use in solar plants, especially as China is likely to need the metal for the photovoltaic industry.
“After weakening in the aftermath of Donald Trump’s election win, we look for silver to make an uneven but notable recovery in 2017,” said James Steel, analyst at HSBC.
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