Gold has been treading water above the $1,340 an ounce level recently, coming off two-year highs hit earlier in August. Year to date the metal has gained almost 26% or more than $280 an ounce.
It’s been gold best first half run since 1980 when the price hit an all-time high on an inflation adjust basis. The rally has surprised many analysts and at the start of the year the vast majority of investment and institutional analysts predicted gold would dip below $1,000 during the course of the year and average below last year’s uninspiring $1,160 an ounce.
Many gold bears have now changed course and some of the big bullion banks including UBS now sees $1,400 before the end of the year, as does French bank Natixis (which predicted last year’s gold price down to the dollar).
Credit Suisse and BofA Merrill Lynch have it even higher at $1,500 going into 2017. Dutch bank ABN Amro, another erstwhile ultra-bearish house, revised its forecast to $1,425, adding that a Trump presidency could really see things explode.
Kitco reports Canadian investment bank RBC Capital Markets has now joined the gold bull chorus sharply revising their earlier forecasts upwards. The bank now sees gold rising to $1,500 in 2017 and 2018 compared to its previous forecast of $1,300.
RBC references the usual suspects for its more bullish outlook: “Elevated geopolitical risk in the U.K./euro zone, increasing systemic risk with increasing negative yields for government bonds and the Fed likely to pursue a more dovish monetary policy”. The Toronto-based investment bank has even better news for investors in gold mining stocks:
“We reiterate our view that investors should look to gold equities for exposure to gold, especially given the increasing free cash flow generated in the current gold price environment.
“We recommend that investors focus on operating companies with attractive margins, solid balance sheets, organic growth opportunities and a consistent operating strategy,” the analysts said. “Our technical outlook suggests that the next gold bull market is under way, and any weakness is viewed as a buying opportunity.”