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D E C E M B E R / J A N U A R Y 2 0 1 8
Gold needs a jump-start; however, battery minerals have risen
in price and may just be getting started as the electrification
of vehicles gains traction. Zinc and copper are also part of the
multi-metal bull market.
by Ron Hall
GOLD
In the last decade, demand for gold has
moved East, driven not only by cultural
affinity, but also by wealth creation and
income growth in India and China. These
countries are by far the biggest markets in
volume terms accounting for some 50%
of global gold demand. Gold jewelry still
represents the largest source of annual
demand for gold per sector and accounts
for around 50% of total demand.
Analysts at Bank of America Merrill
Lynch believe higher bond yields and
a stronger US dollar will weigh heavily
on gold prices in early 2018. In a recent
report, the bank pared back its expecta-
tions for gold in the first quarter of 2018
and now see gold averaging $1,250/oz in
the first three months of the new year,
down from their previous estimate for
prices to average $1,400/oz. (All prices in
US$ unless otherwise noted) Similarly,
France-based bank Natixis said in its
2018 outlook, published in October 2017,
that gold prices will struggle in the next
12 months as global real interest rates rise
through the first half of next year and that
they expect gold prices averaging $1,235/
oz, with a market high of $1,350/oz and
a low of $1,270/oz. By 2019, the French
bank sees prices averaging $1,270/oz with
a high of $1,450 and a low of $1,150/oz.
SILVER
According to a recent Metals Focus report,
the 2017 silver price has disappointed
many investors as with only 5% gain so far
in 2017 it has failed to match gold's 11%
gains this year. However, the precious
metals consultancy concluded that "we
do expect silver to eventually outperform
gold." In June this year, silver hit a low of
$15.60/oz and has since recovered to just
over $17/oz.
The gold-silver ratio would seem to
OUTLOOK
2018
COMMODITIES
