The uncertainty of gold in 2018

The uncertainty of gold in 2018

What should we expect from gold in 2018? The question is quite complicated.

XAUUSDWeekly Jan11.png

According to the weekly chart, gold started 2018 with the highest price from the middle of September 2017 and according to the monthly chart, the highest January opening price since 2013.

XAUUSDMonthly Jan 11.png

It gave a reason to a lot of economists and analysts to predict a rise of gold in 2018. Mostly, they consider the current policy and situation. For example, Commerzbank talks about the loose monetary policy of nearly all key Central Banks and political uncertainty, predicting the price of $1,325 an ounce in 2018. The thing is that the political uncertainty was related to the coming U.S. tax reform that was actual at that time, but uncertainties are already passed.    

However, the question of the price cannot be based just on the current events. The price depends on a lot of factors and especially on the dollar where the Federal Reserve System plays one of the main roles.

Most of the economists, metal analysts take into account the Fed, they expect that actions of the Fed will lead to the strengthening of dollar and gold will lose its position. They suppose that gold will not be needed as a safe haven soon because of the stabilization of risks and tighter monetary policy. Based on this, a lot of economists predict the great fall of gold to $1,200 per ounce, that is really low comparing to the numbers it had at the beginning of the year.

To conclude all of the above, the situation with gold in 2018 is unclear. It depends on a lot of factors. The key points that will affect the dollar and gold in pair with it are: how much time it will take for developed economies to normalize interest rates, what is the impact of the tax reform, when inflation will start to increase and to what extent the Fed will tighten its policy.


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