The mining giant also wants to offload its platinum business as part of an overhaul designed to “unlock significant value.”
Making Gold Demand, Price Predictions for 2017
The World Gold Council and Thomson Reuters both weigh in on what they expect in the market for the yellow metal this year.
London--While 2016 had its ups and downs, the year proved to be a good one for gold.
The metal’s price grew about 10 percent during the year, according to the World Gold Council, noting that it averaged $1,250.80 per ounce in 2016. It also has gained more than 5 percent since the Federal Reserve increased interest rates in mid-December.
For 2017, Thomson Reuters is forecasting an average price of $1,259 per ounce for gold, which would be a slight increase over the 2016 average that the WGC reported.
The strength of the U.S. dollar likely will remain a headwind to further price increases, at least in the first half of 2017, according to Ross Strachan of Thomson Reuters. Additionally, there aren’t many indications that Asian demand, which declined substantially last year, will pick up again just yet.
However, as the year progresses, there is a likelihood of flows of capital into safe-haven investments, possibly spurred by election results in some European countries and the increasing chances of another country leaving the European Union, he said. This will push up the price of gold.
While it doesn’t make price predictions, the WGC did say it believes that gold demand will remain high in 2017, noting a number of factors that will come into play this year.
According to the WGC, there are six major trends that will support demand for the metal this year.
1. Heightened political and geopolitical risks. There’s a lot of uncertainty in global politics right now--key elections will be held this year in the Netherlands, France and Germany, and the U.K. has to negotiate its exit from the European Union.
In the United States, there are some positive expectations about President Donald J. Trump’s economic proposals but there also are some concerns, especially in regards to trade between countries and “geopolitical tensions triggered by the new administration,” the WGC said.
Gold proves to be a strong investment during times of systemic crisis, the council said, adding that it expects gold investment demand to remain firm in 2017.
2. Currency depreciation. It’s likely that monetary policy will split between the U.S. and other parts of the world this year,with the Federal Reserve expected to tighten its policy while uncertainty looms with what other central banks will do. The divergence is likely to lead to fears of currency deprecation.
Since gold has outperformed all major currencies as a means
3. Rising inflation expectations. Nominal interest rates (interest rates before inflation) in the U.S. are expected to increase this year but so is inflation, which could support gold demand for three reasons.
First, gold historically is seen as a valuable investment to hedge against inflation and decreased value of currency. Secondly, higher inflation will keep real interest rates low and keep gold more attractive. The final reason is because inflation makes bonds and other fixed income assets less appealing to long-term investors and, as such, more will turn to investments such as gold.
4. Inflated stock market valuations. Stock markets rebounded significantly during the last part of 2016 and stocks in the U.S. are reaching historic highs.
Generally, investors have used bonds to protect their capital from stock market correction as stock valuations increase but this becomes less of an option as rates rise and the risk of correction becomes even greater. In a time of such great systemic risks, gold’s role as a portfolio diversifier becomes especially relevant.
5. Long-term Asian growth. Gold demand is so closely related to increasing wealth in Asian economies; demand for gold has increased as countries have become richer. The WGC said that macroeconomic trend in Asia will support continued economic growth through the next few years, driving gold demand.
While changing consumer tastes have affected jewelry demand in the Chinese market, its investment market continues to boom. In India, the demonization program is expected to have a negative effect on economic growth and gold demand in the short-term, but “the transition to transparency and formalization of the economy will lead to stronger Indian growth in the longer term, thus benefitting gold,” the WGC said.
6. Opening of new markets. Gold has become more mainstream and accessible to more investors and this trend is expected to continue in 2017.
For example, at the end of last year, the Accounting and Auditing Organisation of Islamic Financial Institutions worked with the WGC to launch the Shari’ah Standard for Gold, opening up the Muslim world to gold investment, a move that one fund manager at an investment firm called a “game changer.”
The Latest
Christie's is selling one of the diamonds, moving forward with its Geneva jewelry auction despite the cyberattack that took down its website.
Retailers can customize and print the appraisal brochures from their store.
Despite the rising prices, consumers continue to seek out the precious metal.
The move follows a price-drop test run in Q4 and comes with the addition of a “quality assurance card” from GIA for some loose diamonds.
The site has been down since Thursday evening, just ahead of its spring auctions.
The late former U.S. Secretary’s collection went for quadruple the sale’s pre-sale estimate.
Tradeshow risks are real. Get tips to protect yourself before, during and after and gain safety and security awareness for your business.
Three fifth graders’ winning designs were turned into custom jewelry pieces in time for Mother’s Day.
Kimberly Adams Russell is taking over the role from her father, David Adams, marking the third generation to hold the title.
As a token of womanhood, this necklace depicts when Venus was born from the sea.
Show your mother some love with a piece of fine jewelry.
The company’s Easton location will remain open.
Brian D. Fleming of Carla Corporation was elected to serve a one-year term in the role.
Sponsored by the Las Vegas Antique Jewelry and Watch Show
Tobak, author of “Ice Cold: A Hip-Hop Jewelry History,” shares how the exhibition came to be, and the pieces people may be surprised to see.
Stars adorned themselves in emeralds, platinum, and myriad bird motifs, writes Associate Editor Natalie Francisco.
M.S. Rau is set to open a seasonal gallery in the high-end resort town early next month.
The branded jewelry market is thriving, said Richemont Chairman Johann Rupert.
The six designers, all participants in the show’s Diversity Action Council mentorship program, will exhibit in Salon 634.
The highlight of his collection is the coveted Patek Philippe Grandmaster Chime, which could sell for up to $5 million.
The “Venetian Link” series modernizes the classic Veneziana box chain in its bracelets and necklaces.
The Seymour & Evelyn Holtzman Bench Scholarship will provide tuition assistance to two low-income students.
The Swiss watchmaker said the company’s plans to use a new version of the Hallmark crown on jewelry would confuse consumers.
The executive talked about the importance of self-purchasers and how fuel cell electric vehicles are going to fuel demand for platinum.
The Indian jeweler’s new store in Naperville, Illinois marks its 350th location, part of its ongoing global expansion plans.
It will award a graduating high school student with about $10,000 toward a GIA diploma and an internship with the Seattle-based jeweler.