By Steve Land, Vice President, Research Analyst, Portfolio Manager, Franklin Gold and Precious Metals Fund, Franklin Equity Group
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,2 prices 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 U.S. 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 U.S. election, but gave back the entire move as U.S. 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.