Gold is likely to flatline for another year in 2018 as rising US interest rates clip momentum, a Reuters poll showed on Thursday, while silver forecasts were cut again after the metal lagged forecasts in the third quarter. A poll of 34 analysts and traders conducted over the last two weeks returned an average gold price forecast for this year of $1,260 an ounce, in line with its year-to-date average of $1,255 and little changed from last year's level.
Next year the metal is expected to edge slightly higher, but only to an average $1,300 an ounce, just 3 percent above this year's predicted level. Annual average gold prices fluctuated by between 8 and 26 percent between 2010 and 2016. A $1,300 average would represent gold's strongest year since 2013, when prices slumped after 12 straight years of gains, but will disappoint bulls hoping for a bigger bounce after receding expectations for a US rate hike and concerns over North Korea sent the metal to its highest in over a year last month.
"Global risks remain high and a flare-up of the tensions between the United States and North Korea could send prices higher," Capital Economics analyst Simona Gambarini said. "That said, markets are being overly sanguine over the prospects for Federal Reserve tightening and we expect that the Fed will continue to hike rates, which is negative for gold."
Banks have again scaled back their silver price forecasts for this year and next after the metal underperformed expectations in the third quarter. Silver, which has a dual role as both an investment vehicle like gold, and an industrial metal widely used in electronics, has lagged gains in both gold and copper this year as investors sought better returns elsewhere.
The poll returned an average silver price forecast of $17.12 an ounce for 2017, down from an average view of $17.32 in a similar poll conducted three months ago. Silver averaged just $16.68 an ounce in the third quarter, below expectations for $17 an ounce in the July poll. An ounce of gold currently buys 75 ounces of silver, compared to just 71 ounces at the start of the year.
"While the ratio did improve marginally, we expect no major reversal in the current trend," Harish Gallipelli, head of commodity and currency at Inditrade Capital, said. "While silver is likely to outperform gold in the medium to long term, we suspect that the move may not happen in the current calendar year. 2018 may be the year where we can see better rallies in silver." The metal, which has averaged $17.14 an ounce in the year to date, is currently at $16.90 an ounce. In 2018 poll respondents expect silver to average $17.90 an ounce, down from an expectation for $18.30 an ounce in July.
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