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.

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.

“As we have gotten further into 2017, five-year real interest rates have oscillated between negative and barely positive. This is a positive factor for gold. In addition, many investors have sought out gold as a core diversifier and hedge against unexpected macroeconomic and geopolitical events—neither of which has been in short supply in 2017,” according to the World Gold Council.

Related: Gold Could Glitter in the Second Half 

GLDW’s underlying index can increase in value when the price of gold increases and/or when the value of the USD increases against the value of the foreign exchange basket. However, the index can decrease in value when the price of gold falls or when the value of the USD depreciates against the forex basket

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

Tom Lydon’s clients own shares of GLD.