Majors

Making Gold Demand, Price Predictions for 2017

MajorsJan 20, 2017

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.

2016_gold-bars.jpg

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

of exchange for the past century--the available supply rarely changes and is pretty dependable--this is likely to drive gold investment demand as investors look to preserve capital. Central banks also will continue to acquire gold to diversify their reserves.

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.”
Brecken Branstratoris the senior editor, gemstones at National Jeweler, covering sourcing, pricing and other developments in the colored stone sector.

The Latest

Stock image of loose polished diamonds
Policies & IssuesFeb 18, 2025
New Customs Requirements for Diamond Imports: What We Know

Beginning in April, companies importing diamonds into the United States will have to list the country in which the diamonds were mined.

 Fabergé Animals
AuctionsFeb 18, 2025
A Menagerie of Fabergé Coming to Sotheby’s

Around 30 whimsical Fabergé animal carvings will go up for auction at Sotheby’s Geneva in May.

Celine Assimon, departing CEO of De Beers Jewellers
SourcingFeb 18, 2025
Celine Assimon Stepping Down as CEO of De Beers Jewellers

Assimon will be leaving at the end of February after nearly five years with De Beers.

Header Image.jpg
Brought to you by
Get Ready for the JA New York Spring Show

This year will feature a new MJSA Showcase and partnership with Piazza Italia.

Tabayer Men’s Oera Collection Selections
CollectionsFeb 18, 2025
Tabayer Debuts Its First Men’s Jewelry Selections

Designs from the brand’s “Oera” collection have been reimagined with modern masculinity in mind.

Weekly QuizFeb 13, 2025
This Week’s Quiz
Test your jewelry news knowledge by answering these questions.
Take the Quiz
Navneet montana sapphire
SourcingFeb 14, 2025
Navneet Gems Now Offering Unheated Montana Sapphires

The wholesale collection features material from the Rock Creek mine in a variety of colors.

Theresa Caputo &LIVY jewelry
CollectionsFeb 14, 2025
Carolyn Rafaelian Partners with ‘Long Island Medium’ Star

The “Divinely Guided” collection, created in collaboration with Theresa Caputo, features symbols that celebrate the power of connection.

Top Image.png
Brought to you by
3 Ways to Capitalize on America’s Newfound Love of Colored Gems

Colored stones are stepping into a jewelry spotlight typically reserved for diamonds—are you ready to sell color?

Lorraine West Diamond Open Heart Ring
CollectionsFeb 14, 2025
Piece of the Week: Lorraine West’s Diamond ‘Open Heart’ Ring

Show some love on Valentine’s Day with this 14-karat yellow gold ring that features pavé diamonds.

Surveillance image of Macy’s jewelry thief
CrimeFeb 13, 2025
Macy’s Employee Foils $1.5M Jewelry Theft

The employee confronted the thief, causing the suspect to flee and leave behind the suitcases full of jewelry.

Namdia rough diamonds
SourcingFeb 13, 2025
Namibian Diamond Co. Suspends CEO, COO After Deadly Heist

Namib Desert Diamonds also put its security manager on leave following last month’s robbery that left one employee dead.

Spectrum and Cutting Edge Buyer’s Choice awards
Events & AwardsFeb 13, 2025
AGTA Announces Buyer’s Choice Award Winners for Spectrum, Cutting Edge

AGTA recently concluded its 2025 GemFair event in Tucson and is already gearing up for next year’s show, set for Feb. 2-6, 2026.

Royal Chain models in 14-karat gold fashion links
CollectionsFeb 13, 2025
Royal Chain Releases Its Spring 2025 Catalog

More than 400 new pieces are featured in the supplier’s latest catalog.

Azra Mehdi pink sapphire ombré heart dog tag necklace in 14-karat rose gold
TrendsFeb 13, 2025
Amanda’s Style File: Hearts for Valentine’s Day

This curation celebrates love with heart-shaped jewelry of all shapes and sizes.

Jewelers Relief Fund logo
Policies & IssuesFeb 13, 2025
Jewelers Relief Fund Reopened to Aid Victims of LA Fires

The fund is collecting money for jewelry businesses damaged by the wildfires in Los Angeles County.

3 natural diamond engagement rings by Marrow Fine, Stephanie Gottlieb, Single Stone, and Sylvie Jewelry
TrendsFeb 12, 2025
5 Engagement Ring Trends Expected to Rule 2025

From chunky bands to vintage diamond cuts and bezel settings, these are the trends experts are seeing take over the bridal market.

Jean Prounis cushion-cut diamond engagement ring
EditorsFeb 12, 2025
Q&A: Marion Fasel on the History of Diamond Engagement Rings

Fasel discusses researching her new book, the most enduring engagement ring styles, and the diamond shape Taylor Swift will pick.

De Beers Jewellers Embrace Bracelet
CollectionsFeb 12, 2025
De Beers Jewellers’ New High Jewelry Pays Homage to the Beauty of Trees

The “Essence of Nature, Chapter One” collection echoes trees and roots, literally and figuratively, through three sets of high jewelry.

Shree Ramkrishna Exports (SRK) diamonds
SourcingFeb 12, 2025
SRK Announces Notable Reduction in Greenhouse Gas Emissions

Late last year, the India-based diamond manufacturer recorded emissions per carat that are 34 percent lower than the industry average.

Peter Smith
ColumnistsFeb 12, 2025
Peter Smith: 9 Store Manager Archetypes

Smith details the types of store managers he’s encountered, with the goal of helping retailers find a person who’s a fit for their store.

myGemma showroom
TechnologyFeb 12, 2025
MyGemma Now Offers Consignment Service

The secondhand reseller stocks pre-owned designer jewelry and watches, along with other luxury goods.

 Ghirardelli Chocolocket
CollectionsFeb 12, 2025
Ghirardelli Is Slipping Chocolate Into a Locket This Valentine's Day

The limited-edition “Chocolocket” fits a mini square of Ghirardelli chocolate inside.

Jewelers of America 20 Under 40 graphic
Events & AwardsFeb 11, 2025
JA Seeking Nominations for Its Next ‘20 Under 40’ Class

The program has been expanded to include a “20 Under 40” list for jewelry suppliers and is accepting nominations through Feb. 19.

Police cars with lights on
CrimeFeb 11, 2025
2 Men Charged With Selling Stolen Jewelry, Watches in NYC Diamond District

One of the men is said to be connected to the South American crew charged with burglarizing Cincinnati Bengals QB Joe Burrow’s home.

Bulgari x MB&F Serpenti watch
WatchesFeb 11, 2025
Bulgari, MB&F Launch Reimagined ‘Serpenti’ Watch

The brands immersed one of Bulgari’s most famous historical icons in MB&F’s ultra-mechanical universe of haute horlogerie.

Boucheron Power of Couture campaign
FinancialsFeb 11, 2025
Boucheron a Bright Spot as Kering’s Full-Year Sales Sink 12%

The luxury titan’s full-year performance was weighed down by struggling sales at its star brand Gucci.

Tacori Stilla ring
SurveysFeb 10, 2025
Jewelry Resilient in 2024 Even As Luxury Sales Slipped, Says Bain & Co.

Bain & Co.’s latest report on the luxury market examines why the market’s customer base is shrinking and how to appeal to consumers in 2025.

×

This site uses cookies to give you the best online experience. By continuing to use & browse this site, we assume you agree to our Privacy Policy