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

Boucheron Scarabée Rhinocéros ring/brooch and Chardon necklace
CollectionsJan 29, 2025
Boucheron’s High Jewelry Takes the Form of ‘Untamed Nature’

The jeweler’s latest high jewelry collection looks into the Boucheron archives to create a “living encyclopedia of high jewelry.”

Elsa Peretti for Tiffany & Co. Bone Cuff
FinancialsJan 29, 2025
LVMH Watch, Jewelry Sales End the Year Down

Watch and jewelry sales slipped 3 percent in 2024, though the luxury conglomerate did see business pick up in the fourth quarter.

Stock image of couple shopping for jewelry
SurveysJan 29, 2025
Consumer Confidence Slips for Second Consecutive Month

It hit a four-month low in January due to concerns about the job market, though consumers remain bullish about the stock market.

Resolutions - 2025.jpg
Brought to you by
3 New Year’s Resolutions for Jewelry Lovers

The new year feels like a clean slate, inspiring reflection, hope, and the motivation to become better versions of ourselves.

Chris Ploof 6 Mokume Gane Rings
Events & AwardsJan 29, 2025
Chris Ploof To Teach Mokume Gane at AJS

The jewelry designer and master metalsmith will present on the ancient Japanese metalworking technique at the Atlanta Jewelry Show in March.

Weekly QuizJan 23, 2025
This Week’s Quiz
Test your jewelry news knowledge by answering these questions.
Take the Quiz
WFDB Moments campaign
SourcingJan 28, 2025
WFDB Joins Efforts to Promote Natural Diamonds With New Campaign

The “Moments” social media campaign emphasizes the emotional ties between natural diamonds and life’s special milestones.

Bliss Lau As We Are Collection Campaign
CollectionsJan 28, 2025
Bliss Lau Celebrates the Intricate Mosaic of Identity in New Collection

The versatile “As We Are” collection features 14 pieces with interlocking designs allowing for 27 different looks worn around the body.

ride_or_die_1872x1052.png
Brought to you by
A Diamond Is Forever Celebrates "Forever Present" Holiday Campaign

A Diamond is Forever hosted a holiday celebration in honor of their new marketing campaign, ‘Forever Present.’

Olympic gold medalist and De Beers ambassador Letsile Tebogo
SourcingJan 28, 2025
Botswana’s First Olympic Gold Medalist Is Now a De Beers Ambassador

Letsile Tebogo will help to promote natural diamonds and the good they have done for his country.

Hargreaves Stockholm NouvelleBox
Events & AwardsJan 28, 2025
NouvelleBox Show Returns to New York City

The showcase, in its second year, will feature more than 20 international brands at its curated event from Feb. 2-4.

Graphic for “Predictions for the Year Ahead” webinar
Recorded WebinarsJan 28, 2025
Watch: Fine Jewelry Market Predictions for 2025

“My Next Question” guests Sherry Smith and Edahn Golan share their 2025 forecasts, from sales and marketing to what retailers should stock.

AGTA Seminar Series
Events & AwardsJan 28, 2025
Here Is the 2025 AGTA GemFair Tucson Educational Lineup

The seminar series covers topics from market trends and colored stone terminology to working with museums and growing an Instagram profile.

Stock image of gavel, books, and handcuffs
CrimeJan 27, 2025
New Jersey Jeweler Sentenced to 2 1/2 Years for Evading Customs

Monishkumar Kirankumar Doshi Shah pleaded guilty to evading customs on more than $13.5 million of jewelry imported into the U.S.

 Jemora Gemhouse
SourcingJan 27, 2025
Dev Shetty To Head New Auction House for Rare Colored Gems

Jemora Gemhouse’s inaugural auction, slated for March, will take place in Dubai and feature polished sapphires.

Rachel Quinn and Gemfields’ Crazy Love collection campaign
CollectionsJan 27, 2025
Rachel Quinn Embodies Feelings of Falling in Love in New Collection

Quinn partnered with Gemfields to create “Crazy Love,” which features Zambian emeralds and Mozambican rubies across 10 pieces.

Arch Crown 2025 Tag & Label catalog
MajorsJan 27, 2025
Arch Crown’s 2025 ‘Tag & Label’ Catalog Is Out Now

The catalog is 48 pages and features more than 100 styles.

Ashley Zhang Jewelry 2025 Lunar New Year Snake Necklace
CollectionsJan 24, 2025
Piece of the Week: Ashley Zhang Jewelry’s Lunar New Year Necklace

The one-of-a-kind necklace was designed in celebration of the Chinese New Year, as 2025 is the Year of the Snake.

Ethical Gem Fair Tucson Anza Gems
SourcingJan 24, 2025
Ethical Gem Fair Heads Back to Tucson

The gemstone show is slated to take place at the Scottish Rite Cathedral.

Ophelia Eve 15 mm yellow gold and diamond hoops
Policies & IssuesJan 24, 2025
These Designers and Retailers Are Raising Money for LA Wildfire Relief

From raffles to auctions to donations, the industry is working to aid charities in Los Angeles amid the raging wildfires.

Mugshots of Zacary Briggs, Aaron Hammond, Tre’von Anthony Neal, and Evan Puckett
CrimeJan 23, 2025
4 Men Arrested After Allegedly Plotting to Kidnap Jeweler

The suspects are accused of planning to kidnap a Miami jeweler and rob him of his cryptocurrency.

Loose diamonds from Namdia
CrimeJan 23, 2025
Security Guard Killed in Armed Robbery at Namibian Diamond Co.

Francis “Gosh” Eiseb, 58, was a senior protection officer for Namib Desert Diamonds, also known as Namdia, in Windhoek, Namibia.

Gemstone Trading Network by RapNet and AGTA
SourcingJan 23, 2025
RapNet, AGTA Partner to Launch Gemstone Trading Network

The online diamond and jewelry marketplace has expanded, introducing a new platform dedicated to colored gemstone trading.

Symposium 2025 Speakers
Events & AwardsJan 23, 2025
Plumb Club Announces Speaker Lineup for Symposium ‘25

The second annual learning forum for retailers is slated for March 13 at City Winery in Pier 57 in New York City.

Fancy Color Research Foundation
SourcingJan 23, 2025
Fancy Color Research Foundation Names New CEO

Roy Safit took over the role on Jan. 1.

National Jeweler columnist Sherry Smith
ColumnistsJan 22, 2025
On Data: How Did Independent Jewelers Fare in 2024?

Sherry Smith shares data on the year gone by, including the breakdown between natural and lab-grown diamond sales.

Los Angeles wildfires
Policies & IssuesJan 22, 2025
Jewelers Mutual Steps Up Aid for LA Jewelry Businesses

The company also is matching donations made to Jewelers of America and the Diamond Council of America’s Jewelers Relief Fund.

Jewelers of America 20 Under 40 graphic
Events & AwardsJan 22, 2025
JA Seeking Nominations for Its Next ‘20 Under 40’ Class

Now in its fourth year, the program is expanding to include a list of “20 Under 40” for jewelry suppliers.

×

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