4. Gold’s volatility was very low
The volatility of gold has been falling in 2017. As the chart below shows, the CBOE Gold ETF Volatility Index, which measures implied volatility calculated through call and put options, has declined from 16.23 to 10.73 over the year.
CBOE Gold ETF Volatility Index over the 12 twelve months.
The low volatility in the gold market in 2017 (especially at the end of the year) was not something unusual, but it was a reflection of a general low volatility in the financial markets, partially due to the presence of central banks. Gold prices remained in a narrow trading range, as investors got used to the presidency of Trump and the Fed’s tightening cycle. However, it may be the calm before the storm. The big jump in the price of gold may follow the unusually quiet period in the gold market.