After a disappointing few years for precious metals investors, gold is finally taking the lead.
With a 12.2 percent year-to-date rally for gold futures and a 9.3 percent year-to-date rise for the S&P 500, 2017 is set to be the first year in which the yellow metal has beaten stocks since 2011. In that year, gold advanced 10.2 percent while the S&P 500 finished flat.
This time around, traders are pinning gold's advance on falling interest rates and a falling U.S. dollar. Both are typically good for gold, a non-yielding asset that is priced in dollars.
The dollar index is currently down nearly 9 percent on the year, while the 10-year Treasury yield has declined from nearly 2.45 percent to below 2.2 percent. The moves have come as the heady economic growth and inflation expectations so prevalent at the end of 2016 have been checked.
For all the talk of gold serving as a play on rising inflation, then, a moderation in inflation has actually been gold's fast friend in 2017 — given that it has tamped down on Federal Reserve rate hikes, reducing interest rates and thus making non-yielding assets like gold look less inferior in comparison.
Looking forward, Gina Sanchez of Chantico Global expects to see both macro moves continue.
"If you consider that we're going to see some debt-ceiling drama, that actually is going to depress yields even more," Sanchez said Thursday on CNBC's "Power Lunch." "And the weakness in the dollar is expected to continue into the next year. Both of those will support gold."
Examining the metal from a chart-based perspective, Phil Streible of RJO Futures said Thursday on "Power Lunch" that with gold dancing above the key $1,300 level that has long served as resistance, "I think that $1,350 is in the cards."
On Friday, gold rose as high as $1,301.40 per troy ounce, and fell as low as $1,281.30.