Time To Diversify: Gold Prices To Hold Steady In 2018 Says Murenbeeld & Co
Editor's Note: View Kitco News' full 2018 outlook coverage
(Kitco News)- "Steadyas she goes" will be the best way to describe the gold market in 2018 with themarket sensitive to upside surprises, according to researchers at Murenbeeld& Co.
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| Chantelle Schieven Head of research at Murenbeeld & Co |
In aninterview with Kitco News, Chantelle Schieven, head of research at the firm,said that her base case is for gold prices to average the year around $1,318 anounce with two scenarios that could see prices fall below $1,200 an ounce orrise above $1,400 an ounce.
Schievenadded that gold’s fate will continue to be tied to U.S. interest rates and thestrength of the U.S. dollar.
“Whilewe see potential for gold in the medium and long term, we do think someheadwinds will keep gold in check throughout the year,” she said.
Schievensaid that they see gold in 2018 as an investor’s market rather than a trader’smarket, as prices look to remain consistent, with a few event-related adding some volatility to the marketplace throughoutthe year.
In thisenvironment she said that investors should feel confident rebuilding a coregold position to diversify away from high stock market valuations.
“I thinkyou are going to see investors diversify into gold as volatility starts to pickup, but I don’t think you are doing to see a huge influx into gold,” she said.“The low volatility that we have seen since mid-2017 is not sustainable.”
It's the New Year, Are You Prepared? #Decrypting2018 | Analysis Added Daily | https://t.co/EhXldCIjd5 pic.twitter.com/BR5YgQU3uf
— Kitco NEWS (@KitcoNewsNOW) January 3, 2018Schievensaid that her firm only sees two interest rate hikes in 2018, which is belowthe central bank’s forecast of three rate hikes and will be positive for gold.
“I thinkwe are going to see lower inflation and it will stay moderate throughout theyear,” she said. “We are thinking that the Fed is going to be slightly moremuted [in] action than they expect.”
In a lowinterest rate environment, Schieven projects to see further weakness in theU.S. dollar. While there is a chance that U.S. real interest rates move higherinto positive territory, Schieven said that it won’t be enough to weigh downthe yellow metal.
Finally,Schieven said that investors will need to keep an eye on equity markets as theycould face a correction in 2018.
Sheadded that she doesn’t know the timing of a potential correction, but thetwo-year rally in equities is not sustainable.
“My gut is telling me that we are going to seesome weakness in equities and it makes sense to diversify into gold,” she said.
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.