It is no secret that gold has been a key winner in 2016. Surprisingly, very few economists and investors believed that was going to be the case at the very start of 2016. It was unexpected moves from the European Central Bank and Japan with more quantitative easing and negative interest rates, and then the Brexit vote, as well as the expectation that U.S. interest rates will be lower for longer (much longer).

The World Gold Council has summed up much of the combined data from the first and second quarters of 2016. It turns out that there may just be a few points driving all this gold demand. And to make matters even more complex, those pressures may only get stronger ahead. We are now considering what may be a driver of gold in 2017.

Total gold demand was 1,285.3 tonnes in the first quarter and 1,050.2 tonnes in the second quarter of 2016. That total demand for the first half is 2,335.5 tonnes, versus total global gold demand of 1,986 tonnes in the first half of 2015 (and 2,232.1 tonnes in the second half of 2015).

The driving forces for gold are investing, general trends and market strength, recycling, central banks and even lower supply. 24/7 Wall St. wanted to look at each of these forces individually.

Gold investment soared to a new high of 1,064 tonnes in the first half. That was a record and was 16% higher than in 2009, according to the World Gold Council. It noted that exchange traded fund (ETF) inflows were the main reason for investment demand more than doubling from the first half of 2015. That growth was most prominent in western markets, with U.S. and European investors reacting to all the geopolitical issues and economic uncertainty. Almost 580 tonnes was bought by ETFs and similar investing vehicles, with another 350 tonnes being bought in gold bars and another 121 tonnes just in official gold coins.

Have you ever heard that strong markets tend to get stronger and weak markets tend to get weaker? If that is true, then gold might rise further. Even if it is not going to rise, this could at least form a much higher base than the prior $1,000 seen at the end of 2015. The World Gold Council said that gold’s price was up 25% in the first half alone, and that was the biggest gain going way back to 1980. We need to consider that 1980 marked a virtual peak in gold, but it also created a much higher floor than in the years before that record was hit. It was just in July that ETF demand was shown to hold more gold than China’s central bank.

Higher gold prices are also increasing recycling efforts again, which is helping to partially offset less robust jewelry demand. The World Gold Council showed that consumer confidence is fatigued in many markets, so the higher gold prices are acting as a ceiling on jewelry demand. Still, recycling activity has jumped and consumers have taken the opportunity to sell at higher prices. Gold’s demand from technology and industrial segments has remained in slight decline for some time now.

Central bank and monetary funds have lower gold demand so far in 2016, but the first half demand was still over 185 tonnes. The first half demand was almost 240 tonnes in 2015. Russia, China and Kazakhstan remained the top central banks buying gold behind this increase in global gold reserves.

You cannot address any market simply by looking at the demand alone. What if there is not enough supply? That would only help drive prices higher or help to create a higher base than seen at the end of last year. If it were not for recycling and hedging efforts, supply looks as though it would have been handily lower than demand. The World Gold Council said of global supply:

Total supply increased by 10% year over year in the second quarter, to 1,144.6 tonnes versus 1,041.7 tonnes in the second quarter of 2015. First half supply is just 1% higher year over year, the slowest rate of first half growth for 8 years. The main contributors to this growth have been recycling and hedging, both of which have been supported by higher gold prices.

There are other issues than just these five to consider. What if currencies weaken further beyond 2016 against the dollar? What is the U.S. Federal Reserve just cannot raise rates very much at all? Fed funds futures do not even price in 1.0% in fed funds any time before the end of 2017. There are also global labor issues calling for higher wages and higher economic participation, which would only drive up the cost of gold production and mining.

It is impossible to say that the trends at hand will continue to drive the gold market higher. Still, the old floor at $1,000 at the end of 2015 may now be closer to a range of $1,150 to $1,250, versus $1,350 or so now.

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Additional top stories for gold bugs:

• Five gold stocks are not keeping up with gold’s rally.
• How to view earnings from Barrick, Goldcorp, Kinross and Agnico.
• How major gold stocks reacted to the Brexit vote.
• Five gold stocks were still under book value in June.
• The United States remains the top gold holder in the world — by far!

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