We already had a relatively positive view on the outlook for precious metals. However, two new developments have encouraged us to revise up our medium-term projections for the price of gold and, as a result, for silver. The first is the resilience of gold despite fading safe-haven demand and rising US bond yields, including in the wake of today’s robust US employment report. The second is growing evidence that gold is benefitting from a revival of demand for inflation hedges – something we have flagged up before, but is now showing through clearly in the data. Our new end-2016 forecasts are $1,350 per ounce for gold (previously $1,250) and $19.50 for silver ($16.50), with further gains, to $1,400 and $21 respectively, projected for 2017. (Gold is currently at $1,270 and silver $15.6.)
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