Analyst Jordan Eliseo sees multiple reasons gold could reach $1,400 next year
According to ABC Bullion’s chief economist Jordan Eliseo, gold is scheduled to break out of its bear market and post significant gains in the new year. In an interview with Kitco, Eliseo said that the yellow metal’s recovery will continue, with prices moving between $1,375 and $1,425 an ounce in 2018.
Among Eliseo’s chief reasons for a breakout in gold are U.S. equities, the dollar and the Federal Reserve. The analyst notes that the performance of stocks has been a major headwind for gold – 2017 was not only a year of records for equities, but also one of the only years where each month was positive for the stock market. Coupled with low volatility in the market thus far, gold had little opportunity to recapture its luster.
The article notes that some have already cautioned that the bull run in stocks is coming to a close, and Eliseo believes that even a partial correction in the stock market would greatly benefit gold. Another boost could come by way of the U.S. dollar, which Eliseo expects to decline in 2018 – a further plunge in the greenback would be a major catalyst for higher gold prices, said the analyst.
While many are looking towards the Federal Reserve’s next move, Eliseo doesn’t think the central bank has a lot of room for maneuvering. While successive rate hikes would, in theory, curb gold prices, Eliseo doesn’t see the Fed assuming a hawkish stance in 2018. The low level of core inflation, said Eliseo, should combine with concerns about growth to keep Fed policy mild throughout the year.
Physical demand should remain stable in 2018, states the article, with Western demand continuing to recover. Eliseo predicts that this year’s strong buying from Europe will pour over into the next year, along with the traditionally strong demand from India and China. Central banks will continue in their role as major drivers of physical gold demand, said Eliseo, with at least a few hundred tons being bought by nations worldwide in 2018.