World Gold Council has said that gold will remain highly relevant as a strategic portfolio component in 2017 despite concerns being expressed by some analysts that the US dollar strength may limit gold’s appeal. It has also identified six major global trends that will support demand for the yellow metal in its latest publication, Outlook 2017.

In the report, WGC notes that not only was gold one of the “best performing assets last year, despite a post-US election pullback”, but also that “the price has gained more than 5% since the Federal Reserve (Fed) increased rates in mid-December”. It has also listed the following six trends that will continue to shore up investor demand in the coming year:

1. Heightened political and geopolitical risks

Elections in key nations in Europe and the impending Brexit, and uncertainity about the policies and impact of the Trump regime are among the factors listed by WGC, which says, “As a high-quality, liquid asset, gold benefits from safehaven inflows”.

2. Currency depreciation

WGC says that while the US Fed is widely expected to tighten monetary policy there could be a divergence in other parts of the world as other central banks may not be willing and/or able to do so.

3. Rising inflation expectations

While agreeing that nominal interest rates are likely to increase in the US this year, the WGC also points to forecasts that inflation in that country will rise as well.

4. Inflated stock market valuations

Stating that in many cases, stock market valuations have been elevated, as investors increase their risk exposure in search of returns in a very low yield environment, WGC says that in this environment, gold’s role as a portfolio diversifier and tail risk hedge is particularly relevant.

5. Long-term Asian growth

The report poitns out that macroeconomic trends in Asia will support economic growth over the coming years which is likely drive gold demand, which is generally closely correlated to increasing wealth in these countries.

6. Opening of new markets

The report points to new potential sources of demand in China including new products such as Gold Accumulation Plans, physically settled gold contracts in the Shanghai Gold Exchange, etc; the increasing interest from pension funds beginning with Japan and now likely to spread to other countries; and the opening up of the Muslim world to gold investment with the launch of the Shari’ah Standard for Gold.