There’s an overwhelming sense of deja vu as far as the gold market is concerned.
Two years ago, at almost this exact time at the end of 2015, we witnessed the first US Federal Reserve System (the Fed) rate hike since the 2008 global financial crisis (GFC) – a 25-basis point increase. This followed years of promises, threats and jawboning by the Fed with respect to interest rates.
Back then, gold finished 2015 in a limp fashion, with market experts fully expecting the Fed to follow through on its stated commitment at the time of three to four rate-planned rate increases during 2016.
Gold did the exact opposite, however – it surged out of the blocks during early 2016, as it became obvious that the Fed’s rate talk was exactly that – all talk and no action – and it sustained its positive performance right up until the election of Donald Trump as US President in November 2016.
So here we are again, with the Fed finally set to get tough on rates. Of course, we’ve heard all this for 24 months now – and instead of gold meekly surrendering, it’s outperformed both the broader US share market, as well as the US currency so far in 2017.