Politics are likely to be the main driver of the dollar gold price in 2017, with an average of $1,272/oz forecast by trade house and refinery MKS Monday.
Frederic Panizzutti, senior VP at MKS, said that uncertainties including a new US president and Brexit, alongside upcoming French and Germany elections, are likely to push the price higher.
These factors "could result in increased political and geopolitical tensions and more market volatility until a new global equilibrium is reached. They should provide enough support to gold and offset the impact of a possibly strengthening dollar on the back of FOMC decisions."
Markets are increasingly factoring in more interest rate hikes from the US throughout 2017.
"The official sector shall continue to be a net buyer of gold. We are expecting gold to moderately strengthen on the back of safehaven buying," Panizzutti added.
MKS is forecasting a high of $1,380/oz and a low of $1,120/oz.
Looking at palladium, the senior VP said that MKS expects a 2017 average of $791/oz. Palladium out-performed the other precious metals in 2016, closing the year 23% higher.
"But the story is not over. Tightening emission rules in China could have a significant impact on the market in 2017, resulting in more demand. The supply/demand deficit is set to further widen and would offset any eventual ETF related selling. While our sentiment for the other three metals is moderately bullish, we are not getting out of our comfort zone in calling palladium to outperform the other precious metals," Panizzutti said.
MKS forecast a 2017 high for palladium of $890/oz and a low of $650/oz.
Palladium was spot bid as of 1145 GMT at $741/oz with gold at $1,202/oz. MKS forecast a 2017 average silver price of $17.65/oz with platinum at $1,033/oz.
