Although in our previous annual summary, we claimed that 2015 was a “fascinating time for the global economy and the gold market”, it turns out that 2016 was even more captivating. The last year started with a Chinese bang, when the global stock markets – worried about the economic slowdown in China – plunged. Next, the Japanese shook the world by introducing negative interest rates. Investors were also preoccupied with the FOMC members’ remarks, the Deutsche Bank’s problems, the difficult situation of the Italian banking system, terrorist attacks in Europe, and the disastrous U.S. payroll employment in May. However, the biggest shocks of the last year came later, with the surprising outcomes of the Brexit vote and the U.S. presidential election. This year ended with the second Fed hike in a decade.

In this edition of the Market Overview, we will summarize the last year in the gold market from the perspective of its fundamentals. This analysis should help investors better understand the gold market, and draw investment conclusions for the new year. We will also present our gold outlook for 2017, focusing on the impact of the Fed’s rise and Trump’s policies on the price of gold. Given that in the long run the gold trade is generally about the Fed’s actions and confidence in the U.S. economy, the path of interest rates may be the biggest driver in the gold market in the next year.