‘Global investors will continue to favour precious metal as an effective diversifier’
Increased market uncertainty and expansion of protectionist economic policies will make gold increasingly attractive as a hedge in 2019, says the latest report by the World Gold Council (WGC), adding that structural economic reforms in key markets will continue to support demand for gold in jewellery, technology and as means of savings in the year.
“We expect that the interplay between market risk and economic growth in 2019 will drive gold demand,” said the report.
According to WGC, key trends that are expected to influence the precious metal’s price performance include financial market instability, monetary policy and the U.S. dollar and the structural economic reforms.
“Against this backdrop, we believe that gold has an increasingly relevant role to play in investors’ portfolios,” the report added, while highlighting that in 2019 global investors would continue to favour gold as an effective diversifier and hedge against systemic risk.
Gold’s performance in the near-term would be heavily influenced by perceptions of risk, the direction of the dollar, and the impact of structural economic reforms, WGC said. “In the longer term, gold will be supported by the development of the middle class in emerging markets, its role as an asset of last resort, and the ever-expanding use of gold in technological applications,” the report stated.
Incidentally, gold prices witnessed a see-saw journey in 2018 as investor interest ebbed and flowed despite steady growth in most sectors of demand. The precious metal also faced headwinds for most part of 2018 with the dollar strengthening, the Fed continuing to hike rates steadily while other central banks keeping policy accommodative, and the U.S. economy getting a fillip in the form of tax cuts.