Categories: General Market Commentary / Precious Metals
Topics: General Market Commentary / General Precious Metals

World Gold Council spots trends that'll be gold’s 2018 friends

Synchronised global economic growth, shrinking central bank balance sheets, rising interest rates, insubstantial asset prices and market transparency are the trends that will be gold’s best friends in 2018, the World Gold Council said on Tuesday.

These trends, the council said in delivering its outlook for gold in the new year, would maintain gold’s relevance as a strategic asset and with greater transparency ensuring that customers are better served.

Outlining how gold had outperformed all major asset classes except stocks in 2017, the council reported an $8.2-billion inflow into gold-backed exchange-traded funds and a 13.5% gold price rise in dollars, the greatest yearly gain since 2010. In the first three quarters of last year, US jewellery demand hit a seven-year high and China’s consumer demand increased by 12%.

An upward growth trajectory is expected to continue in China, even if at a slower pace, and the demonetisation and tax implementation that shocked the market last year are expected to become gold positive this year in India, where mandatory jewellery hallmarking will put an end to under-carating.

The trade-data reporting initiative of the London Bullion Market Association and the suite of exchange-traded contracts launched by the London Metal Exchange’s LMEprecious would provide greater transparency and transacting efficiency in the London wholesale market.

If a tax exemption for gold is approved in Russia, the initiative may herald the development of a new gold investment market, in keeping with gold-backed investment vehicles around the world, which ease and cheapen access to gold.

Continued economic growth, the council’s research shows, underpins gold demand and as incomes rise, demand increases for gold jewellery and gold-containing technology, such as smartphones and tablets.

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