While the price of gold saw a modest increase in 2017, it was relatively stable compared to previous years. This stability was influenced by a combination of factors, including central bank policies, geopolitical events, and changes in supply and demand.
Gold gained slightly more than in 2016, with all 2017’s lows being higher than the bottoms formed in December 2016. The first two months of the year were particularly favorable for gold, with the metal reaching a peak at $1,346 in early September. However, a rebound in the risk appetite among investors and a stronger U.S. dollar resulted in a downward trend in gold prices since then.
Why did gold price rise in 2017?
In 2017, the price of gold saw a modest increase, rising from an average of around $1,150 per ounce at the beginning of the year to an average of approximately $1,250 per ounce by the end of the year. This was a relatively small increase compared to some of the large swings that the price of gold has experienced in the past.
In 2017, the price of gold rose by more than 10%, performing better than in the previous year. Despite macroeconomic conditions being unfavorable for the gold industry, the precious metal still managed to post a solid gain due to several factors. The rise in geopolitical tensions, such as the North Korean nuclear ambitions and concerns about Russian tampering in the U.S. election, led investors back into the gold market as a hedge against declines in other asset classes. The decline of the U.S. dollar against major foreign currencies, including the euro and the British pound, also supported the rise in gold prices.
One of the key factors that influenced the price of gold in 2017 was the US Federal Reserve’s monetary policy. Throughout the year, the Fed raised interest rates, which had a negative impact on the price of gold. Higher interest rates tend to make bonds and other fixed-income investments more attractive, reducing demand for gold, which does not pay interest.
However, despite the Fed’s tightening monetary policy, the price of gold remained relatively stable throughout 2017, largely due to continued geopolitical uncertainty and a lack of clear direction from other major central banks.
One major event that had an impact on the price of gold in 2017 was the ongoing conflict in the Middle East. Tensions and ongoing violence in the region contributed to uncertainty and increased demand for safe-haven assets like gold.
Another factor that influenced the price of gold in 2017 was changes in supply and demand. Despite continued exploration and mining efforts, the overall supply of gold remained relatively stable, while demand increased due to growth in major economies like China and India.