Is 2017 Gold's year?
Gold is finding a whole new foothold in 2017. Demand has been rising as faith in Trump's ability to push through campaign legislations promises has been dropping. This combined with rising inflation and negative real interest rates has led some analysts to believe that gold might reach record highs throughout the years the likes of which we haven't seen since 2013.
Trumps failed healthcare initiative sent already weary traders directly for the safe-haven asset as the USD and trust in Trump diminished. In addition to this, the Brexit go-ahead and upcoming European elections have created a market environment of caution, giving the precious metal an ideal incubation for coming growth, which is expected to truly take hold or fall away at the close of the current quarter.
Another factor in Gold's traction is the rising of US inflation and interest rates. After the interest rate raise in March there was a surprising reaction of the Dollar dropping and gold rising, though often such decisions push the USD up and allow the metal to take a back seat. At least two more rate hikes are anticipated throughout 2017, which will each certainly have a significant effect on the correlating assets. A major factor will also be whether the Fed voices plans for some serious policy tightening.
Ronald-Peter Stoeferle, whose company deals with upwards of 100 million Swiss francs, has been quoted as saying he believes gold could reach $1,400 or even $1,500 an ounce this year. This is largely due to the fact that: “Inflation is picking up…. We’re seeing a pick-up in inflation all across the globe. We’re seeing it in the U.S., where basically every inflation indicator is constantly rising and making new highs. We’re seeing it in Europe, we’re seeing it in Asia.”
What is certain is that it would be wise to keep an eye on this for the months to come