'Disappointment' Awaits Gold And Silver In 2018 - ABN Amro
Editor's Note:View Kitco News' full 2018 outlook coverage
(Kitco News) - After a strong year, precious metals will start 2018 with lots of headwinds ahead, according to ABN Amro.
“Looking to 2018, ABN AMRO expects precious metal prices to disappoint,” said Georgette Boele, ABN Amro’s precious metals senior analyst, in a report published on Tuesday.
The Dutch bank said that higher U.S. dollar and U.S. Treasury yields will put downward pressure on gold and silver prices in 2018. For example, gold is estimated to trade between $1,200-$1,250 per ounce next year.
ABN Amro also pointed out that the Fed will raise its key policy rate at least twice by 25 basis points in 2018, which will significantly weigh on the precious metals prices.
Despite the gloomy forecast, the bank highlighted that 2017 has been a great year for precious metals, especially for gold and palladium.
“The expectations for the U.S. economy and president Trump's policies proved to be too rosy. In the course of 2017, these expectations were revised down, causing the dollar to weaken across the board. Gold and silver prices all benefited.”
Palladium prices had the most surprising surge, rising by 50% in 2017, said Boele, adding that everything worked in favor of the metal, such as strong fundamentals, higher demand for petrol cars, and robust trade growth.
But, Boele cautioned investors that palladium prices are not likely to see the same great returns in 2018.
“A repeat of the extremely strong price rise in 2017 seems practically impossible. We think that the expectations for palladium prices are too high and that investors will be disappointed. This will probably prompt them to take some profit on their open positions, leading to lower prices,” she said.