Gold has enjoyed greater demand in a low interest-rate environment as the hard asset becomes more attractive to investors compared to yield-bearing assets. However, traders lose interest in gold when rates rise since the bullion does not produce a yield.

In the face of a stronger dollar and speculation that the Federal Reserve could raise interest rates as many as three times this year, gold prices could move modestly higher with some help from emerging markets, namely China and India.

“On the other hand, the pillars of the “Trickle Down,” or bearish, portion of our thesis collectively create a headwind that should keep gold from having a breakout repeat of what happened in the first half of 2016. To be clear, we do not think these bearish drivers will overwhelm the up-moves in gold this year, but we do think they will handicap them,” according to the RBC note featured in Barron’s.

For more information on the gold market, visit our gold category.

Tom Lydon’s clients own shares of GLD.