Forecast gold price 2018: Everything is possible

20.11.2017 | 3 min lukea

While the gold price has recovered over the past period, recent figures show that the goldmine production is still decreasing. Therefore, analysts are divided in their expectations about the average gold price in 2018.

Earlier this year we wrote about how the gold price decreased after Emmanuel Macron won the French elections. Compared to the beginning of this year the gold price is now 10% higher.

The most recent report of the World Gold Council shows that the demand for gold has decreased to 915 tons during the third quarter, which is the lowest number since 2009. On a monthly basis the demand for gold decreased with 9% and on an annual basis with 12%. Notable is the consumption of gold products in China, which rose on an annual basis by 23,1%. The demand for gold bars and coins in China rose 57% to 64,3 tons. Another boost is the increase of the amount of gold that is used for technologies, which rose for the fourth quarter in a row. Over the past quarter the demand grew with 2% to 84 tons, due to the strong demand for LED’s and the continues growth of 3D-senors used for smartphones.

The goldmine production decreased in the third quarter on an annual basis with 1% to 841 tons. Therefore the total goldmine production over the first nine months of 2017 is 2,420 tons, which is a record according to the World Gold Council. However, the gold production of market leader China decreased on an annual basis for the fifth quarter in a row. Recently implemented rules have a negative impact on the production and the World Gold Council expects that this will also be the case in the coming quarters. The gold production in Canada rose on an annual basis with 10% due to the goldmines Brucejack and Hope Bay, which started with commercial production earlier this year. Goldmine Riany River is also expected to start with commercial production soon.

Gold price in 2018

Several analysts expect that the gold price will recover in 2018. TD Securities claimed to Kitco News that the gold price might benefit from a careful tightening of the monetary policy by the Federal Reserve. TD Securities expects that the first interest rate hike might be executed in December and that only one or maybe two interest rate increases could follow in 2018. Analysts estimate that the average gold price in 2018 could be USD 1,313 per ounce, while the same analysts estimate the average gold price for 2017 at USD 1,257 per ounce. TD Securities believes that the gold price could go towards USD 1,325 per ounce in the fourth quarter of 2018.

On the other hand, there are some analysts that believe the gold price could decrease. For example Société Générale expects that the Federal Reserve might increase the interest rate at least three times before the end of 2018 and the average gold price could therefore fall to USD 1,175 per ounce. It remains to be seen which interest rate policy the Federal Reserve will execute in the coming period and how this will influence the gold price.

The further share performance is depending on different corporate-, industry- and economic factors. Investors should consider the risks in their investment decisions. It is possible that developments run different than investors expect them whereby losses could occur.

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