The world's looking a bit scarier in 2017, and that makes gold a lot more appealing.
Gold futures for February temporarily crossed above the key $1200 per ounce Tuesday, continuing an upswing that started on Dec. 15, the same day the 10-year bond yield peaked just below 2.5 percent in the "Trump rally." After making a move to $1207.20, gold futures were at $1199.80 per ounce.
Beyond the usual fears of terrorism and Middle East conflicts, potential trade skirmishes — if not wars — loom, and global tensions are rising. Across Europe, a number of elections could give nationalistic parties more clout. In France, candidate Marine Le Pen has said the country would leave the euro if she is elected, and that would undermine all of the euro zone. Le Pen has gained a slight lead in the latest poll, but she is still seen as a long shot candidate.
"We think there's sufficient geopolitical risk and some of the more traditional reasons — tightening money supply, relatively low recycling levels. We have elections in Germany and France, so the geopolitical risk elements would not necessarily be just U.S.-centric. Also we're coming off a year, last year when emerging market physical demand was rather poor," said James Steel, chief HSBC commodities analyst. "Any kind of recovery from last year is going to be good news."