A glittering start to 2016
The gold price staged a spectacular rally in the first quarter of this year, rising by 17% in US dollar terms. This was its best performance in almost three decades, significantly outperforming other major stock, bond and commodity indices.
The rally, in our view, was supported by five key factors:
- 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).
We believe that these factors will continue to support both investment and central bank demand in the coming quarters. Combined with an analysis from past bull-bear cycles, this suggests that we may be entering a new bull market for gold.