The year 2017 is almost over. What did we learn about gold during this time about this typically safe-haven yellow metal?
1. Gold may prosper in good times
First, gold may shine in unpleasant macroeconomic outlook. Generally, gold performs the best during economic slowdown or turmoil. In 2017, the economic conditions were far from recessionary climate. Global economic growth accelerated and became more synchronized among countries. The U.S. economy performed well, the unemployment rate achieved a record low, while inflation remained subdued. The Fed hiked interest rates three times, while the Republicans managed to pass a tax bill. And the U.S. stock market continued its rally, while the cryptocurrencies experienced a parabolic rise at the end of a year. Does it look like a supporting environment for gold? Not really.
However, the price of the yellow metal has risen more than 12% in 2017, as one can see in the chart below. Perhaps it’s not very impressive, but not bad given the macroeconomic environment. And much better than a savings account or Treasuries.
Gold prices over the last twelve months.