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A Gold Investor's Guide to the Potential Rate Hike in 2017

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A Gold Investor's Guide to the Potential Rate Hike in 2017 PART 1 OF 12

How Gold Prices Have Reacted to the Anticipated Fed Rate Hike

Gold’s price in 2016 and beyond

Gold prices rose 8.5% in 2016 to close the year at $1,150 per ounce. This annual rise came after a break of three years. Gold prices slipped in the last two months of 2016 following Donald Trump’s presidential win.

How Gold Prices Have Reacted to the Anticipated Fed Rate Hike

How Gold Prices Have Reacted to the Anticipated Fed Rate Hike

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Gold prices started the new year on a positive note as well. They rallied almost 9% in the first two months of 2017. However, due to anticipation of the Fed hiking interest rates at its March 14–15 meeting, gold prices have taken a beating. Economic data out of the United States has also been positive, supporting prospects of a rate hike. Gold prices had fallen 4% in March as of March 13, 2017.

Gold miners’ performance

The VanEck Vectors Gold Miners ETF (GDX) had risen 4.6% year-to-date (or YTD) by March 13, 2017. Of mining stocks, Barrick Gold (ABX) has gained the most with a rise of 14% YTD. Goldcorp (GG) has seen a gain of 9%, while Kinross Gold (KGC) has risen 4.3%. Newmont Mining’s (NEM) stock has fallen 3.7%.

Barrick, which deftly beat its 4Q16 earnings estimates, provided an upbeat outlook for 2017. For this reason, it has outperformed its peers YTD. Analysts are happy about Goldcorp’s future production and cost outlook. Newmont, on the other hand, disappointed investors and analysts, announcing higher costs for the next two years.

In this series, we’ll discuss the factors responsible for gold’s gain and reversal in 2017. We’ll also discuss factors such as the Fed’s actions, Trump’s policies, Europe’s upcoming elections, inflation expectations, and the outlook for the US dollar, to get an idea of where gold could be headed in 2017. We’ll start by looking at analysts’ opinions.

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