2018: A Difficult Year For Gold

Excluding December, it was a difficult year for gold and gold stocks.

The U.S. dollar was stronger than expected in 2018, which created a major headwind for gold. The U.S. economy received a boost from the Trump tax cuts and deficit spending, resulting in strong growth, low unemployment, and an annual gain of 4% for the U.S. Dollar Index (DXY). Investors showed little interest in gold investments amid the booming economy and stock market highs.

Weak fundamentals caused the gold price to fall through technical support to its yearly low of $1,160 in August.

U.S. Dollar Index vs. Price of Gold for 2018

Source: Reuters GFMS, World Gold Council, Bloomberg, VanEck Research.

However, gold cut its losses late in the year, as market sentiment seemed to change to favor gold. Gold ended 2018 with an annual loss of just $20 (1.6%).

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