Is Gold’s New Year’s Bounce Here to Stay?



Gold’s price in 2016

Overall, gold 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 had slipped in the last two months of 2016 following Donald Trump’s presidential win.

November 2016 was the worst month for gold prices since June 2013. In one month alone, gold’s price fell 8%. Before the election, gold had risen ~20% since the beginning of the year. The Federal Reserve’s rate hike expectations, in addition to Trump’s win, took the best of precious metals prices at the year’s end.

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Gold’s bounce

Gold prices have, however, started the new year on a positive note. Gold prices have rallied almost 6% in 2017. As Trump’s inauguration nears, the market is getting jittery.

The United Kingdom’s decision to leave the single market of the European Union (or EU) is also weighing on investors’ minds. These factors are giving a nice bounce to safe-haven assets, including precious metals and the Japanese yen.

Gold miners’ performance

Despite the post-election trauma, investors in gold ETFs such as the SPDR Gold Trust ETF (GLD), the VanEck Vectors Gold Miners ETF (GDX), and the VanEck Vectors Junior Gold Miners ETF (GDXJ) have benefited the most from gold’s upward journey. GDX rose 52.5% in 2016, while GDXJ rose 64.2%. Moreover, many mining stocks such as Barrick Gold (ABX), IAMGOLD (IAG), New Gold (NGD), and Kinross Gold (KGC) reported even better performances.

In this series, we’ll discuss the factors responsible for gold’s gain and reversal in 2016. 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 in order to gain an idea of where gold could be headed in 2017. We’ll start by looking at analysts’ takes.


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