The biggest influence on gold prices is monetary policy, which in the US, is controlled by the Federal Reserve.
Fed communication about rate hikes and election outcomes appear to have been the main drivers of the gold price fluctuations in 2017, as they were in late 2015 and 2016.
In September 2015 the Fed was pretty much focused on raising rates, and that proved to be a negative inflection point for the gold price, when it dropped to a six-year low in December of $1,051 per ounce.
When the Fed turned dovish in early January 2016 it proved to be another inflection point for the gold price, and it started rallying in early January 2016.
Then hawkish comments from the Fed created a sell-off in the gold price in the second half of 2016. And during 2016 we had two big spikes in the gold price from the Brexit vote and the U.S. elections.
Fed communications about rate hikes continue to be significant drivers of the gold price in 2017, exactly as they were in 2016.
The key driver of the gold price is NOT inflation, but real interest rates, which are the difference between nominal interest rates and inflation.
Gold does not provide any yield and real interest rates represent the opportunity cost of owning gold. If real interest rates move higher, the gold price moves lower and vice versa.
The single most important relationship that explains the gold price is the direction of real interest rates.
Interest rates have a big influence on gold prices because of a factor known as "opportunity cost."
Opportunity cost is the idea of giving up a near-guaranteed gain in one investment for the potential of a greater gain in another. With interest rates holding near their historic lows, bonds and CDs are, in some cases, yielding nominal returns that are less than the inflation rate. In other cases, like in Europe, nominal interest rates are even negative!
Why own bonds (or other asset)s that essentially earn negative interest rates in real terms, when you can instead, park your money in gold.