After starting the year at around $1150/oz, gold has averaged $1224.60/oz this quarter, peaking at $1262/oz on February 27.

Metals Focus director Nikos Kavalis noted that hawkish comments from some US Federal Reserve officials weighed on gold in early March.

“However, following the March meeting, information released by the Fed suggested that most FOMC members stood by the view that two more rate hikes were appropriate for the rest of this year,” he said.

“This is something that the market had largely priced in since late 2016.”

Gold has bounced back this week towards 2016 highs, and Metals Focus believes it has further to go.

“We believe that negative real rates, plus several tail risks, should yield further gains for gold as institutional investor interest in the metal grows,” Kavalis said.

“Prices may therefore test $1475 before the end of this year.”

Metals Focus cited negative interest rates as a key support for gold this year.

It also noted that Republicans tended to exercise fiscal prudence, and Donald Trump’s fiscal policy would fall short of expectations.

As a result, Metals Focus believes the global economy faces just as many risks as last year, like US trade and foreign policies, Brexit, European populism, tensions in the Middle East and Europe, and slowing Chinese growth, which will drive safe haven buying.

Metals Focus expects investors to be net buyers of gold, and positions in absolute terms remained light, leaving space for inflows over 2017.

However, it flagged physical demand to remain weak, though supply was also expected to decline.