Gold Forecast: Large Institutional Investors Revise Gold Estimates & While I Know First Continues To Accurately Predict Gold Returns

Gold Forecast

With gold up over $300, or 30% since the start of 2016, many investors and banks that had anticipated Central Bank rate hikes along with economic growth and recovery, have since revised their estimates. The Federal Reserve had announced on September 21st, 2016, that they would once again leave rates unchanged, further spiking gold spot prices, as they provide an alternative investment for investors seeking alternatives to low-interest rate bearing instruments. Currently, Gold spot price is trading at $1,323.63 an ounce, with many prominent banks expected prices to continue to rise through 2017.

Gold Forecast


For example, UBS, has now revised its estimates, for prices to reach $1,400 an ounce by the end of 2016. Credit Suisse and BofA Merrill Lynch are at the higher end, estimating gold to reach $1,500 in the beginning of 2017. Bank of America has explained that Brexit and other macroeconomic factors have affected their outlook on the following months ahead. For example, the Bank of England had already hinted at rate cut, along with most major countries continuing to maintain unchanged rates, that are close to zero (if not negative). They had explained that, “The current uncertainty also suggests that an accelerated rate hiking cycle is unlikely, so interest rates globally are set to remain low, which in turn reduces the opportunity costs of holding a non-yielding asset like gold.” Additionally, Canadian investment bank RBC Capital Markets as well revised from $1,300 to $1,500 for 2017 and 2018.

Additionally, Jeffrey Currie, the global head of commodities research at Goldman Sachs, on June 27th, 2016, explained that although gold still remains a great hedge against political uncertainty, gold probably will increase much entering 2017. He did however, raise his gold price forecast to $1,300 for 3 months, $1,280 for 6 months, and $1,250 for 12 months. All of which are measured per ounce. 

These revisions come after much geopolitical risk from the UK and Eurozone, as the Brexit has steepened trade relations and fueled uncertainty. As well as the EU have its own economic problems as it enters further negative interest rate territory with almost no inflation seen and a financial sector that is having much trouble, like Deutsche Bank and other banks in Greece.

Earlier, on July 5, 2016, HSBS as well raised its 2017 outlook $1,310 an ounce, explaining higher demand for gold is seen as high systematic risk is seen as well as uncertainty for interest rate hikes especially in the U.S. market, but as well in EU and Japan, that are seeing negative interest rates.

Furthermore, many central banks around the globe, like Japan, are trying other means to increase inflation such as quantitative easing, whereas the central bank would buy up financial assets like bonds. This action has as well acted as a catalyst for gold prices, as investors use gold to deter against inflation risks (having an inverse relationship).Therefore, the actions/response of central banks around the world have acted as catalyst for both spot and future prices. Although many had initially bearish perspectives about gold in 2016, Brexit, slowing economic growth, and other negative economic sentiment turned them towards gold.

I Know First, Ltd., a financial technology company that provides daily investment forecasts based on an advanced, adaptable, self-learning algorithm. The company as well provides gold forecasts to its investors on a daily bases, using machine learning to find detect trends in the commodities market, and eliminate ‘noise’ in the market that many investors are prone to. This market ‘noise’ refers to short-term (daily or intra-day) fears, worries, and negative fueled perception regarding the price of a security or general market atmosphere. Below is a recent 3-months forecast, from June 24th, 2016 to September 24th, 2016. The overall average return was 9.04%, and the main gold index that it tracks is the Philadelphia Gold and Silver Index (XAU), which had a return 6.26% for the period.

Gold Forecast

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