After a strong start to 2016, which saw the gold spot price rise from $1,060 per ounce at the start of the year1 to a high of $1,366 per ounce in July,2prices lost some of their luster, as price-sensitive Chinese and Indian investors scaled back their gold purchases and investors settled down following the United Kingdom’s June vote to leave the European Union (Brexit), which had been a strong catalyst for the second quarter’s spike in demand. Gold-price volatility also increased leading into the US presidential election in early November.
After it became apparent Donald Trump pulled off a surprise win, gold spiked up more than $60 per ounce in international trading during the night of the US election, but gave back the entire move as US markets opened. After the election, gold sold off as investors rotated to sectors that were viewed to be greater direct beneficiaries of a Republican-controlled House and Senate under President-elect Trump.
The price of gold currently sits at around $1,184 an ounce,3 or just over 11% higher than where it started the year. In early January, many investors began pouring their money into assets that are traditionally perceived as “safe havens,” which includes gold. Gold tends to attract investor attention as a store of value when markets are in turmoil because it typically has a low correlation with other asset classes and a long history as a financial instrument.