The gold price settled today at $1,254/oz. Exactly one year ago it was $1,251/oz. That’s not the only similarity – in both cases the price rallied strongly in the new year after ending the previous year heading south as the Fed raised rates (14 December 2016 and 16 December 2015).
So far this year’s rally has not been as impressive as last year’s, adding just over $100/oz from the low compared with $200/oz in 2015/2016. Furthermore, as gold fell more in 4Q16 than it did in 4Q15, this February we are still trading $50/oz lower than where the price began in 4Q, whereas in February 2016 we were $50/oz higher (Fig 1).
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
