Gold price forecast for 2018
This year, gold prices have stabilized in the range of $ 1150-1350 / ounce, but experts forecast for 2018 suggests a new stage of growth in quotations. Increased geopolitical tensions and instability of financial markets will be growth drivers for precious metals. In addition, the value of gold will depend on the Fed's policy and further changes in the key rate.
In 2017, the price of gold shows moderate growth. At the beginning of the year, the quotes were at the level of $ 1,150 / ounce, however, already in the third quarter, gold prices fixed at $ 1250-1350 / ounce. The increase in prices for precious metals is associated with an increase in the level of uncertainty, experts emphasize, which increases the risks of investors.
The growth of geopolitical tensions is the main factor in increasing the value of gold, which is reflected in the forecasts of experts for 2018. Investors are taking into account the risks associated with North Korea’s missile tests and the uncertain consequences of Brexit.In addition, the unpredictable policy of the new US President Donald Trump increases the attractiveness of investing in precious metals.
In addition to the political factor, the cost of gold next year will depend on changes in the Fed's key rate. The regulator continues to raise the rate level in response to improved dynamics in the American economy. Tightening monetary policy by the Fed is a negative factor for the precious metals market, which will partially offset the growth of political instability.
The period of low rates and large-scale programs to stimulate economic growth led to an increase in gold prices to $ 1600-1900 / ounce. However, in 2013, the Fed radically changed its policy, which was reflected in the decrease in prices for precious metals. At the peak of the fall in 2015, the price of gold reached $ 1,050 / oz.
Next year, gold quotes will overcome the mark of $ 1,350 / ounce, experts predict. At the same time, there will be significant volatility in the market due to the impact of short-term factors.
Gold price forecast: prospects for 2018
Despite the expected increase in the rate of the Fed, next year the dollar will continue to lose its position, analysts predict.The American currency shows negative dynamics due to the policy of Donald Trump. Including the further format of trade relations between the USA and China remains in question.
After Donald Trump came to power, there was a significant deterioration in US-China relations. The confrontation of the two largest economies in the world in the trade sector is reflected in the dynamics of currency quotes. In such circumstances, the dollar will retain the potential for further weakening, which will affect the fluctuation of quotations next year.
Another factor that will determine the dynamics of gold prices in 2018, is the cost of production. The cost of precious metals at the level of $ 1200-1300 / ounce does not allow to reinvest enough funds in the development of mining. As a result, there may be a shortage of supply in the market, which will lead to a corresponding increase in prices. At the same time, the level of demand will depend on the development of alternative instruments that compensate for the risks of the traditional banking sector.
Investing in gold is a way to minimize risk, experts say. Demand for precious metals shows growth when geopolitical and economic factors cause concern from investors.It should take into account the development of alternative tools that solve such problems. First of all, this refers to the cryptocurrency market, whose dynamics in 2017 show rapid growth.
Digital currencies in the near future will be the main competitors of investments in gold, analysts emphasize. These assets attract investors who do not trust the traditional banking system. In addition, the rapid growth of basic cryptocurrency quotes provides a high level of profitability. As a result, the precious metals market will lose a significant part of the investment, which will affect the change in prices.
Unlike gold quotes, the value of the main cryptocurrency will remain unstable. If the leading central banks continue the process of cryptocurrency legalization, this tool will continue to increase the cost. The new restrictions will lead to reversals, which remains the main risk for digital currencies for 2018.
Analysts' base forecast for the next year suggests a gradual increase in quotations to $ 1300-1400 / ounce. The main factor of growth will remain political uncertainty, which next year will remain at a high level.In the event of an escalation of the conflict with North Korea, the cost of an ounce of gold can reach a milestone of $ 1500.
The pessimistic scenario for the precious metals market is associated with an active increase in interest rates by central banks. In addition to the Fed, a significant impact on the dynamics of quotations will have a rate increase from the ECB. Restoring the growth rate of the eurozone economy may allow the regulator to proceed to the adjustment of the level of interest next year. In this case, gold prices will remain in the range of $ 1200-1300 / ounce, subject to stabilization of geopolitical factors.