The World Gold Council has expressed concern that the strength of the dollar could limit the global appeal of gold this year.
In a recent report, it noted that in addition to currency issues, heightened political and geopolitical risks could impact on gold prices and consequently jewellers.
It noted that key elections in the Netherlands, France and Germany would increase political risk.
While the UK economy is still expanding, it said, the pound fell sharply following the referendum decision and continues to weaken every time the markets sense that there is an increased chance of a ‘hard’ Brexit.
In the US, there are positive expectations about some of the economic proposals of president-elect Donald Trump and his team, but there are also concerns, the council said, adding: “the US dollar has gained ground since Trump swept to victory last November, but uncertainty is rife.”
Jim O’Sullivan, chief US economist at High Frequency Economics, sees “a meaningful risk that negotiations on trade will turn belligerent” and suggests that “confidence in markets could be affected by geopolitical tensions triggered by the new administration”.