Gold Has Best Year Since 2010 With Near 14% Gain In 2017

– Gold posted second straight annual gain in USD in 2017

– Gold in 2017: up 13.6% USD, up 2.7% GBP, down 1.4% EUR

– 2017 is gold’s best year since 29.5% gain in 2010

– Strong performance despite rate hikes and stock bubble 

– India’s gold imports surged 67% in 2017, Turkish, Chinese demand strong

– Gold finished 2017 with longest rally since June 2016

– 2018: Currency War and The Year of the Phoenix?

 

Gold waved a very positive goodbye to 2017 and was delighted to shout ‘Happy New Year!’ to all investors. In doing so, gold bullion prices advanced for an eighth session yesterday, extending its longest stretch of gains since mid-2011.

This was the perfect start to a new year which followed an annual surge of nearly 14%. 2017 is the second year of gains for gold. In 2016 it posted 14% gains, its best gains since the 29.5% gain in 2010.

Gold bullion’s stellar advance is even more impressive when one considers the extremely mixed year that was 2017. It ranged from Federal Reserve rate hikes to rapidly advancing stock markets. The year’s events were like a tug-of-war on the drivers of the gold price.

Gold: bad or good?

2017 on paper perhaps should not have seen a 14% gain in the gold price.

There was an acceleration in global economic growth as countries began to keep pace with one another. Much to Trump’s delight official figures showed the U.S. economy performed well. Not only did the the unemployment rate touch a record low, but inflation also remained subdued.

Meanwhile the Fed hiked interest rates three times, something many believed would be the kryptonite to gold’s superhuman strength.

Investments that are often seen to as alternatives to gold performed exceedingly well. The U.S. stock market continued its record-breaking rally, while bitcoin and other cryptocurrencies experienced what can only be described as a bubblicious and parabolic rise in the last few weeks of 2017.

And, right at the last minute the Republicans managed to pass a very dodgy looking tax bill, prompting Trump to peacock around even more.

Following Trump’s election there had been high hopes for the price of gold. After all, here was a man who had been elected without political experience and on the back of creating social and economic divisions. However, following Trump’s inauguration there was a post-election sell-off at the start of the year. Many were clearly feeling positive about Trump’s impact on both the domestic and international stage.

As various unexpected scenarios played out, from failure to get much done in the White House to sober-rattling with North Korea, the precious metal began to climb. Towards the end of summer, in early-September the gold price hit a year-high of $1346/oz. It then quickly sold off.

Whilst the yellow metal finished the year with a respectable run of gains, the final figures did not match those of say, the S&P 500 which climbed by over 19% in the same year.

Does this mean that relatively speaking the gold price is something we shouldn’t be delighted with? Not at all. The year of 2017 was one of arguably bearish events for the price of gold yet it still made near 14% gains, better than money in a savings account.

This second year of climbing by gold should serve as a timely reminder that the precious metal is not something that will be poked and prodded thanks to short-term, unsustainable economic and political events. Gold investment is for the long-term and there is little benefit thinking that one event will affect the reasons to hold gold.

All of the ‘positives’ of 2017 such as low inflation, Fed hikes and tax bills being passed arguably came about because of farcical economic readings and political manoeuvring. None of the statistics or decisions made as a result are sustainable, particularly against a background of increasing geopolitical risk. The gold price reflected this, particularly in its reactions to