The World Gold Council (WGC) points out that gold’s eye-popping 17% (in dollar terms) surge in the first quarter of 2016 put it ahead of the stock market in its best quarterly performance in nearly three decades.
Gold also posted impressive performance in terms of other currencies, rising 11% in euros, 20% in British pounds, 9% in Japanese yen, 16% in Chinese renminbi and Indian rupees, and 12% in Turkish lira.
WGC believes the early-year rally is no flash in the pan, as has happened several times in recent years when gold launched out of the gate strong then faded in the stretch. “So far, we have had one very strong quarter. But inflows into gold look, to us, set to remain robust in [the] second quarter, as the current macroeconomic environment remains supportive for both investment and central bank demand,” the WGC stated.
“We believe that market uncertainty and expansionary monetary policies will continue to support both investment and central bank demand. This, combined with an analysis of previous bull-bear cycles, suggests we may be entering a new bull market for gold,” said WGC in reporting on the gold performance figures.
According to WGC analysis, “The rally in the gold price is being supported by five key factors, in our view:
- Ongoing concerns about economic growth and financial stability in emerging markets
- A hiatus in the rise of the US dollar
- The implementation of negative interest rate policies by leading global central banks
- The return of pent up investment demand for gold
- Price momentum (i.e. investors following gold’s upward trend)”