3, 6 and 12 month price forecasts for gold from GS
- For 3 and 6 months, looking for USD1200 / ounce
- 12 months out, USD1250
Analysts at Goldman Sachs say they are "relatively agnostic" on the outlook, outlining bearish and bullish factors.
They cite a reason for weakness in the gold price:
- GS economists expect 3 Federal Reserve rate hikes in 2017
- Assess the probability of a rate hike by June at 80%
- Longer dated real rates in the US are expected to increase slightly, which will put some downward pressure on gold
But, on the other hand, as supporting the gold price:
- Expect U.S. equity prices rally to fade by the second half of this year
- Increasing geopolitical & political risks (European elections, potential trade restrictions)
- US economic-policy uncertainty to stay elevated
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On oil, GS say:
- Awaiting hard data
- "Markets need to see that the OPEC supply cuts generate real inventory draws and the strong manufacturing survey and Chinese credit data create real activity. In other words, 'show me the activity:' real demand, real stock draws and empty warehouses"
Analysts at GS say recent data indicates global GDP is gaining, GS have been expecting 3.6% growth, but seeing now 4.4%. This should be bullish for oil:
- "Confirmation of such robust activity and inventory draws has the potential to push prices above our expectations"
- They do warn though that higher prices will attract increased US shale production, which could limit crude prices
But ... need to see follow through from real activity and inventory draws. If not there could be a "significant correction", not just for oil but for prices in broader financial markets
Oil forecasts:
- WTI as high as $57.50/bbl in Q2 of 2017
- $55 for the rest of the year
