Gold continued to gain ground in 2017, picking up about 12% and extending its streak of winning performances. Yet many investors weren't pleased at how the yellow metal didn't manage to outpace the returns of the stock market. With prices closing the year around $1,300 per ounce, some might be surprised to discover that many professionals anticipate weaker gains for gold in 2018 than they saw last year. Let's take a closer look at what's in store for the precious metal in the coming year.

Where is gold headed in 2018?

Gold is facing a great deal of uncertainty right now. Many of the difficult conditions that analysts expected in 2017 didn't come to pass, as rising short-term interest rates didn't lead to a big jump in longer-term bond yields. That in turn kept financing costs relatively low for gold investors, and that helped to avoid a hit to prices. Moreover, rising geopolitical uncertainty kept the gold market on its toes, especially in light of Trump administration comments about North Korea and the Middle East.

Image source: Getty Images.

One reason why rising rates didn't hurt gold very much is that they were largely restricted to the U.S. market. Across the globe, most central banks remained extremely loose on monetary policy during 2017, and that helped to support greater foreign investment among international players in the gold market. The falling U.S. dollar in relation to other major currencies like the euro and British pound also helped support gold, whose price is generally denominated in dollars.

A wide range of predictions shows how different opinions are among those following the gold market. Although some expect better prices ahead, others think that conditions are ripe for a possible pullback. Few see particularly dramatic shifts in either direction, although that's fairly typical for analysts taking stands on precious metals markets with annual projections.

2018 price projections on gold (per ounce)

Data source: Analyst projections via Kitco.

Gold prices: Pro vs. con

The tug of war between bulls and bears in the gold arena involves not only differences of opinion on what's likely to happen macroeconomically but also what the impact of such moves would be on gold prices. Most agree that interest rates are likely to continue to rise in the U.S. during 2018, with the Federal Reserve already having predicted multiple boosts to the short-term federal funds rate in the coming year. Yet if that doesn't come with corresponding interest rate increases in other major global economies, then the impact on the worldwide gold price could be less dramatic than it would otherwise be.

Similarly, an uptick in mining activity could start to push gold supplies higher, which would potentially depress any price increases that would otherwise occur. Yet inflationary pressures elsewhere in the economy could serve to support gold, especially if rising wages start to occur in response to low unemployment figures. Gold has traditionally done well during periods of inflation, as investors look for stores of value that won't be vulnerable to the same devaluation risk as currencies.

Finally, geopolitics represents an ever-present wildcard for the gold market. With so much uncertainty about U.S. foreign policy and the way that other nations across the globe will respond to it, the potential for disruptions that could send gold prices soaring is always there.

The only sure thing about gold

It's impossible to be certain whether gold will rise or fall in 2018, but what's likely is that markets will remain fairly volatile. Despite the flat performance that most analyst projections anticipate, wilder swings could easily happen at various times throughout the year.