Gold prices expected to drop in 2017

Apr 24, 2017 News

– Report

The price for gold is expected to face downward pressure in 2017 due to higher projected interest rates, according to the World Bank’s Commodity Markets Outlook for the year. This was reported in the End of Year Report for 2016 presented by Finance Minister, Winston Jordan to the National Assembly.
The report said that the average international price of gold for 2016 was US$1,249, which was 7.6 percent greater than US$1,161 for 2015. Based on the World Bank’s outlook for the year the price for gold is expected to continue in a downward direction.
The projected price so far for an ounce of gold in 2017 is US$1,150, for 2018 the price is expected to be US$1,138; for 2019, US$1,126 and in 2020, US$1,114.
Meanwhile, gold experts abroad have also concurred with the World Bank’s projection that gold volatility will continue in 2017 with prices fluctuating between US$1,050 and US$1,200 per ounce.
Some of the global factors, which have been highlighted to have an effect on the price of gold, include the strength of the United States of America economy, demand from China and India, and Brexit.
According to Jordan’s report, the risks which were mentioned in the 2017 budget speech remain relevant for Guyana’s relatively undiversified economy.
“These include unfavourable commodity price movements, climate change and adverse weather events, internal financial distress in our major industries and de-risking in the banking sector.”
According to the document, in addition to these risks, foreign currency shortages in the Caribbean region have become a growing concern since the 2017 budget was presented. It was noted that the downward revision to projected growth in the Latin American and Caribbean region also suggests that the risk of adverse shocks to demand for Guyana’s exports has increased.
“These challenges underscore the importance of effectively implementing the programmes and policies outlined in the 2017 budget, so that we can advance towards our goal of becoming a more diversified and resilient economy.”
Despite this, Guyana’s gold declarations for the year have already surpassed what was declared during the same period in 2016. For January, 44,668 ounces was declared compared to 35,000 ounces last year. At the end of 2016, the total amount of gold declared was 712,706 ounces compared to 451,490 in 2015.
Minister of Natural Resources, Raphael Trotman had told this newspaper that the amount of gold declared in January speaks well for the possibility of the sector surpassing last year’s historical declarations.
The Minister had commended small and medium scale miners for contributing 70 percent of the 2016 declarations with Troy Resources and Guyana Goldfields Inc. making up the remaining 30 percent.
He said that the performance of the industry thus far is noteworthy despite all the other challenges. The challenges referred to include small fallout between miners and the government concerning taxation measures which were introduced in the 2017 budget.
According to the Minister, declarations will rise even more as his administration continues working on curbing smuggling of the precious metal.

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