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Tags: analysts | mixed | outlook | gold

Analysts Hold Mixed Outlook for Gold

Analysts Hold Mixed Outlook for Gold

Mike Fuljenz By Tuesday, 20 March 2018 08:58 AM EDT Current | Bio | Archive

Recent comments by analysts with differing views reflects the current uncertainty of the gold market.

Gold Newsletter Editor Brien Lundin believes 2018 is shaping up to be a good year for metals, but he admits that making short-term gold price predictions is difficult right now.

Lundin noted that markets are still getting acquainted with Jerome Powell as the new head of the Fed and sorting out what to expect under his regime, adding that he expects Powell to be “more frank” than his predecessor, Janet Yellen.

Lundin called President Trump’s tariff plans a “terrible, terrible idea” with respect to their impact on gold. “I think it creates uncertainty, which creates volatility in the market. There is a scenario in which gold could benefit from that. But I don’t look at it as a long-term driver of gold prices,” Lundin said.

TD Securities takes a more positive view of the proposed tariff plan’s effect on gold, suggesting a global trade war that might be triggered by the tariffs could make gold a “winner” in “relative” terms compared to other commodities.

“These policies look to be negative for aluminum, steel, base metals, crude oil, and PGMs [platinum group metals] due to the negative impact on demand. Gold would likely be the winner in relative, if not in absolute terms,” TDS said.

Goldman Sachs, long a critic of gold but a recent convert to gold supporter, believes a trade war could actually help gold.  A potential outcome of such a trade conflict is that other nations would start dumping U.S. Treasuries, which could boost gold demand, GS said in a research report.

“If materialized, a reduction in U.S. Treasury holdings may boost the demand for gold, supporting our bullish view on gold prices,” Goldman commented.

Another impact beneficial to gold could be capital flows, particularly from U.S. trade partners that are net savers, GS said.

Adrian Day, chairman and CEO of Adrian Day Asset Management, notes that gold rose 13% last year and sees more gains ahead for the yellow metal.

Speaking with Investing News Network at the 2018 Prospectors & Developers Association of Canada conference in Toronto, Day said that “the main events for gold are interest rates, inflation and concern about other markets.” He added, “all of these add up to a positive year for gold.”

Day acknowledged the effect of Fed interest rate hikes and inflation on gold, but also took note of the encroachment of investor interest in bitcoin on the gold market.

“I think bitcoin has had much more of an effect on gold stocks, particularly junior gold stocks, because it is the same kind of investor who is buying junior gold stocks, bitcoin, marijuana — so it has been competition for that,” Day noted. But he added that “for gold itself, I think it is very marginal. It’s definitely competition and it’s definitely a negative for gold, but to me it’s very, very slight.”

TD Securities: Silver a Good Bet for Long Term

As early as last November, Canadian bank TD Securities was touting silver as “the precious metal to buy in 2018.”

In its 2018 Global Outlook, TDS advised investors to go long silver with a price target of $20 an ounce, a 17% gain from its price at the time.  As of the end of this week, silver was at $16.73.

“With equities in record territory and pricing in both low rates and earnings perfection, there will be a growing constituency who believe that there is more downside than upside risk. This historically has meant that investors beef up gold and precious metals exposure as a hedge,” they said in the November report, adding, “Underperforming silver is set to shine as gold improves amid still low real rates, firm demand, weak supply and higher [volatility],” they said.

This week, the bank reiterated its confidence in the upside potential for silver in light of some recent price weakness.

“Given our uncertainty that the Fed hikes four times and the likelihood real rates will remain low, we expect precious metals will perform well moving forward — going long silver looks to be an attractive bet,” analysts at TDS said.

Mike Fuljenz is a member of the Newsmax Finance Brain Trust. He is also the editor of the NLG award winning Michael Fuljenz Metals Market Weekly Report. Discover more by Clicking Here Now.

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Recent comments by analysts with differing views reflects the current uncertainty of the gold market.
analysts, mixed, outlook, gold
Tuesday, 20 March 2018 08:58 AM
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