ABN Amro expects gold price of $1,450 in 2017

The gold price dropped a few percent in May, but according to Georgette Boele of ABN Amro, this is only a temporary correction in a new bull market. The price of the precious metal has been under pressure in recent weeks due to speculation about a possible interest rate hike in the United States, but according to analyst Boele, that is no reason to adjust her forecast for the gold price.

In a new report In an ABN Amro report this week, Boele writes that the gold price traditionally has a strong negative correlation with the US dollar, as both assets are used by central banks as a form of reserves. It is therefore no surprise that the price of gold rose so sharply between February and April, as the dollar lost 8.5% of its value during this period.

Real interest rate

In May, the dollar strengthened again on speculation about an interest rate hike by the US central bank, but the Gold price hardly decreased. According to Georgette Boele, this is a positive sign. If the sentiment towards buying gold was negative, the drop in the price of gold would have been much greater.

According to Georgette Boele, the chance of an interest rate hike in the United States is very small. If you add to that the expectation of rising inflation, the real interest rates that investors get on US government bonds fall. And it is precisely this lower real interest rate that is beneficial for the gold price in the long run, according to ABN Amro's analyst.

Gold price to $1,450

At the beginning of this year, ABN Amro bank raised its target price for gold for the end of 2016 to $1,300 per troy ounce. Later, the price target was raised again to $1,370 per troy ounce. The bank expects real interest rates to fall further in the near future, making gold more attractive compared to other safe havens. Boele expects the share price to rise further to $1,450 per year in 2017. Troy Ounce Gold.

Gold price forecast according to ABN Amro