At the end of March, Thomson Reuters GFMS released its Gold Survey 2017, looking at the developments in the global gold market and the future of gold prices. What are the main conclusions of the report?

According to the GFMS team, 2016 can be viewed in many respects as the mirror image of 2013 for the gold market. This is because we saw then a rush for the exit from the gold ETFs, while last year there was a widespread return of investors due to the surge in geopolitical uncertainty. Indeed, in 2016, there was a seven-year peak in ETF buying.

When it comes to the outlook, the authors believe that the gold market will remain highly reliant on sentiment, at least in the short term. They expect safe-haven flows later in 2017 due to either an anti-EU election result in one of the European countries, or unorthodox actions undertaken by Trump. Moreover, as the U.S. equities are quite elevated, gold may benefit from risk-aversion. On the other hand, the greenback, the expectations of “Trumpflation” and the Fed’s tightening cycle are likely to remain major headwinds for the yellow metal. Hence, Thomson Reuters’ analysis is in line with our view that gold remains at the crossroads torn between bullish political factors and a bearish macroeconomic outlook.

On balance, the GFMS team forecasts the price of gold to average $1,259 per ounce in 2017, which implies only a small increase from the average of $1,250.80 in 2016. However, the average price in the first quarter of 2017 was $1,219.80, so there is room for further gains, indeed. Interestingly, other analysts, such as Metals Focus, expressed a similar view, forecasting the average price of gold in 2017 at $1,285.

Summing up, Thomson Reuters predicts the average price of gold at $1,259 per ounce. Surely, in the case of some negative shock, the yellow metal could easily meet that target. However, some of the risks mentioned by the GFMS, such as an anti-EU election outcome or the correction in the U.S. stock market, may not materialize. Then, the price of gold may fall short of these expectations. Moreover, investors should remember that the GFMS, just like the WGC, pays too much attention to physical demand in Asian markets.