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Gold bullion price leap forecast by Chinese analysts

Monday, December 5, 2016

The price of gold bullion is forecast to rise strongly in 2017, according to analysts in China – the world’s biggest gold buyer.

Continued political uncertainty is likely to lead to leaps in the price per troy ounce that could be as high as 25 to 50 per cent.

Haywood Cheung Tak-hay, the honorary permanent president of the Chinese Gold and Silver Exchange Society, pointed to this year’s events – the UK’s Brexit vote, the election of Donald Trump as the next US President – and the effect they have had on increasing gold’s attraction as a safe haven investment.

He told the South China Morning Post: “The political uncertainties are likely to continue to haunt investment markets next year. There are presidential elections in France, Germany and the Netherlands. These will all introduce uncertainties in the market.”

His view was echoed by Joseph Tong Tang, chairman of Morton Securities, who pointed to turmoil in Europe with the possibility of more countries seeking to break away from the EU.

He said: “The disintegration of the European Union would endanger the future of the euro. We will see more uncertainties in the European market and the euro zone.”

This morning (Monday December 5), Italian Prime Minister Matteo Renzi resigned from his post after losing a referendum on reforming the country’s constitution. In another surprise political move, New Zealand’s John Key also announced he was stepping down due to family reasons.

These latest moves have not yet pushed up the price of bullion, with gold valued at £915.93 per troy ounce at 10:45, although there may be changes later when the US markets begin trading.

In China, the yuan currency has lost seven per cent of its value this year, following last year’s five per cent decline. Analysts believe this devaluation will also continue to push investors in the direction of gold bullion.

Jasper Lo Cho-yan, chief executive of King International Financial Holdings, said: “The price of gold will reach US$1,800 per ounce [in 2017], I believe, up about 50 per cent this year.”