Last year, the change of gold price was relatively average, despite the different economic variables that could have affected the price of gold on the downside. Gold is continuously performing better with sable and reliable prices, and economists expect to see the same throughout 2018.
Below is what we need to look at in 2018 in terms of the price of gold.
Forecasts of 2018 gold prices
Economists predict an increase in the price of gold gradually throughout 2018. Although the predictions vary, there are those who are pessimistic about forecasts that the US economy is going to strengthen and lower the growth of gold, while others predict that gold price will rise by 17% this year.
Let us look at some of the factors that can influence the gold price:
Brexit
The uncertainty in politics is always an advantage for gold, and in the British politics, Brexit caused a rise in the price of gold. A week after the Brexit results, the value of the pound started to recover, but the silver and gold prices remained higher. The rise in the metal prices showed how the gold value drove the overall price while the sterling currency purchasing power remained low. The markets will watch how the events of the European Union unfold.
Government debt
The US and UK have shown an increasing accumulation of government debt for years, and 2018 seems to be the year where we expect to see an interruption of the rise in government debt. If the government begins to show signs of interrupting the US and British economies, it could be an indication that there will be a rise in gold prices.
US Federal Reserve rates
The US hiked the federal funds rate target range by 25 basis points as expected by analysts this year. Although there are three more rate hikes expectation in 2018, the Fed indicated that they were looking to be more aggressive in the years to come.
After the rate hike, spot gold rose by 1% before the announcement of the decision. The dollar index that measures the dollar against a basket of 6 currencies dropped by 0.55% after it rose to its highest level since March 1st. The market expectations for a change in rate hike have caused gold to fall 4%from a 1.5 year high that was in January. When the U.S interest rates are higher, it reduces the demand for bullion that is not yielding. But on the other hand, analysts expect the escalation n the political tension across borders to cushion the price of gold.
Cryptocurrencies
In 2017, there was a gigantic rise of cryptocurrencies all over the world. While most experts believe that gold and digital currencies do not productively compete against each other, this may take shape in 2018. If we see the bubble of Bitcoin growing further in 2018, investors may not favor gold when 2019 approaches.
Gold prices in the near future
Economists expect to see the strongest annual price performance of gold in five years, as the uncertainty in geopolitical tensions drives the investment in gold and investment funds that are bullion-backed.
The research team at GFMS metals have predicted that 2018 will see a rise in gold prices by 8% which takes the average price of gold from $1,360 to a short-term move to the price of $1,500.
Regarding mining, production was lower last year which was the lowest since 2008 which totaled 3,247tones according to GFMS. This year, production is set to hit 3,265 tonnes with Asian countries like China, Mongolia, and Indonesia contributing to the rise, accompanied by Canada, Australia, and Russia.