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After a $120 rise (per ounce) in gold prices in the past six weeks, analysts are expecting higher prices. The latest forecast has come from GFMS Thomson Reuters, which said in its just-released fourth-quarter Gold Survey 2017: “We expect gold prices to average $1,360 per ounce and hit a 2018 peak of over $1,500 per ounce later in the year.” The price is around $1,360, a level seen for the first time after August 2016. It was $1,242 in the second week of December. The survey explained: “Our forecast discounts three Fed rate hikes, although a potential overheating from the effect of the new tax reform could lead to more aggressive tightening, limiting gold’s upside.” The US Federal Reserve is getting a new chairman next month and President Donald Trump has approved Jerome Powell to be Janet Yellen’s successor. The move is likely to provide continuity in US monetary policy, with the economy growing now for nine years straight. In 2018, the Fed will have eight meetings and in the next one there may not be any rate hike, but afterwards three rate hikes are expected. If the rate rises further, investment in debt could go up, limiting chances of gold prices rising as estimated. So far the weakening dollar has helped gold’s climb. The survey also said the year 2017 had seen a good demand for the yellow metal by central banks, indicating several central banks had continued diversifying their forex reserves, for which gold is a preferred alternative. Last year, China remained the top consumer with 816 tonnes (marginally lower than a year before) while India stood second at 762 tonnes, up 27 per cent. An interesting aspect of 2017 for India was the imposition of the goods and services tax (GST), which came eight months after the withdrawal of high-value currency notes. After the note ban, the demand for gold increased sharply but smuggling plummeted but after the GST was imposed in July, it increased sharply. The GFMS survey notes unofficial imports or gold smuggling in 2017 was 133 tonnes (17 per cent of consumption, alarmingly high), some 10 tonnes higher than in the previous year. However, of the 133 tonnes, almost 70 per cent entered unofficially in India in the past six months after the three per cent GST was imposed. India’s gold demand in the fourth quarter of 2017 decreased by nine per cent year-on-year to 246.8 tonnes, but was the highest in four quarters. The survey also notes that India imported 216 tonnes of gold in the fourth quarter of 2017, down eight per cent year-on-year. Investment demand decreased by 22 per cent year-on-year in the fourth quarter. The decline was primarily due to frantic buying last year following demonetisation during the same period. Jewellery consumption was down four per cent.