Gold Price Forecast: Analysts Foresee Geopolitical Issues Driving Up Prices in the Future

Wednesday, November 22, 2017

gold bars and money

With Thanksgiving fast approaching, it’s only natural to look back at the rest of 2017 and get a clearer picture of where precious metals have moved. This year was a year of consistently inconstant geopolitical headlines. If it wasn’t the Russia investigation or intrigue on Capitol Hill causing investors to move to gold, it was issues with North Korea. And while that might seem like an anomaly to some—simply an inconsistent year for headlines—there are those who believe that this represents a “new normal.” This new normal could play into the hands of gold investors who are looking for a strong hedge in their portfolio.

Citi Experts See “New Normal” Boding Well for Gold Prices in 2018

Where are gold prices set to go from here? It does appear that gold has hit a clear bottom in 2017—that the yellow metal doesn’t like venturing too far below the $1,250 per troy ounce mark. And now, Citi analysts are putting forth the idea that the 2017 headlines we saw weren’t an aberration, but in fact constitute a “new normal” that could then push gold above $1,400 for what they call “sustained periods.”

That makes the current environment—in which gold hovers below $1,300—a unique buying opportunity. It’s possible that gold’s price will last at these levels for another two months, especially as markets wait to see what the Federal Reserve will do in December with interest rate levels.

Risk Coming with the Optimism?

The article at CNBC was not without a tempered approach, citing Nandini Ramakrishnan, a strategist with JP Morgan as saying that while philosophically, investors tend to love gold, there is a “huge downside risk.”

Because of gold’s sensitivity to interest rate hikes, it’s possible that the December Federal Reserve meetings could have a dramatic impact on the yellow metal, especially as it sets the precedent for where investments will head in 2018.

Success in 2017 for the Stock Market—Will it Be Back Next Year?

On the other hand, investors have been watching the stock market set new records throughout 2017 with a bit of caution. The common strategy of “buy low, sell high” is testing many investors right now, especially as the Dow Jones Industrial Average shows little signs of slowing. As always, the holiday season will be vital to the level of confidence in the economy. And with the winter holidays, investors seem to need lots of growth over the previous year to feel that the economy has truly improved—the logic being that if the situation on the ground is really as good as the markets, people will spend more freely at the holidays.

A strong holiday season combined with news out of the Federal Reserve could potentially push gold to recent lows before the new year starts, but it’s also possible that this would represent an ideal buying opportunity before gold moves toward $1,400, which Citi analysts seem to expect. After that, there’s no telling which headlines will change the geopolitical winds.

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Darren Capriotti

Darren Capriotti has been a market analyst for the past decade and is an expert in precious metals. He prides himself on his ability to analyze the market and offer true value to investors with questions about gold, silver, and other precious metals. Highly educated, incredibly passionate, and more accurate than most, Darren offers a true, unbiased look into what investors can expect in the precious metals market. You can reach Darren at [email protected].