Gold: Prices to hover around $1,200/oz mid-June - Natixis

In view of analysts at Natixis, the market has already factored in most of the June rate hike, and Natixis see gold prices hovering at around $1,200/oz mid-June. 

Key Quotes

“Further along this year, we expect two more rate hikes (on top of June) which should apply further pressure on gold (September and December).  Moreover, we expect that the ECB will announce tapering in September of this year which should put further pressure on gold.” 

“Despite our bearish views on gold prices, we have revised slightly higher our average forecast for the year as a whole so as to take into account the weight of the North Korean and US geopolitical tensions.  In addition, we have become more optimistic on Indian demand for gold as we expect GDP to continue growing steadily. The IMF expects Indian growth to be at 7.2% in the current fiscal year and to rise to 7.7% in the next one.  As such, we see gold prices average $1,185/oz in 2017.”

“Looking into 2018, we see gold prices hitting their lowest during the first quarter of 2018, after which we expect a very slow increase in prices due to lower mined output.  Since the collapse in gold price back in 2012-13, sharp cuts in producer CAPEX will start materialising in lower output by the end of this year.  That said the increase in prices is expected to be weighed down by higher rates in Europe and the US.  We see gold prices averaging $1,130/oz in 2018.”