BMO Sees Less Enthusiasm For Gold Ahead Of Two More Rate Hikes
(Kitco News) - One Canadian bank is not too optimistic that prices can push much higher as they see gold trading in a relatively tight range ahead of two more U.S. rate hikes later this year.
In a report Tuesday, analysts at BMO Capital Markets reiterated their forecast for gold to average $1,175 an ounce in 2017. At the same time the bank sees silver prices average $17 an ounce.
The Bank’s forecast is down from current prices as April gold futures last traded at $1,241.10 an ounce, up 0.58% on the day. March silver futures last traded at $17.57 an ounce, up 0.76% on the day. The yellow metal has pushed to nearly a three week-high as markets continue to digest dovish sentiment from the Federal Reserve.
“We expect the three rate hikes coming this year to put a damper on enthusiasm for gold. With this in mind, we are predicting that 2017 will see a mostly range - bound gold price with some upward seasonal trend towards the end of the year,” the analysts said.
The bank added that that the yellow metal will be sensitive ahead of interest rate hikes as expectations increase and then rally following the actual move.
“We would assume that the general trading pattern around the FOMC meetings will remain intact, but will likely become more subdued as the market adjusts to a new world where rate hikes become more normal,” the analysts said.