WGC Report Foresees Major Market Trends for Gold in 2018

SEATTLE (Scrap Monster): The World Gold Council (WGC) has published a new report that outlines the outlook for gold market in 2018. The report explores global economic trends and their impact on gold. On the whole, the agency believes that all major trends tend to support gold demand.

In 2017, global economy witnessed solid growth. The risk assets rose in value, with all major stock markets recording strong gains. The year also saw tightening of monetary policies by world central banks. Incidentally, the US Federal Reserve declared three interest rate hikes during the year. Also, gold, as an asset, performed remarkably well. The gold price in US dollars rose sharply by nearly 14%, registering its biggest ever yearly gain since 2010. The heightened investor uncertainty on account of rising geopolitical instability resulted in increased inflows into gold-backed ETFs.

Looking forward, WGC expects the global economic growth to sustain in 2018. China-the world’s largest gold market, will continue to grow. The second largest market-India is also likely to report stronger economic growth backed by positive effects resulting from the recent economic and tax reforms including demonetization and Goods and Service Tax (GST). The continued economic growth is likely to bolster gold demand in 2018.

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The continued expansion of global economy is likely to lead to tighter monetary policy. The US Fed is expected to announce at least three rate hikes during the year. However, the overall level of rates is expected to remain low from a historic perspective. The WGC notes that high rate situation may increase the opportunity cost of investing in gold.

The global financial markets had a bull run in 2017. The S&P 500 is currently at an all-time high. Several other stock markets are trading near their historic highs. Although analysts expect the strong run in market to continue in 2018, risk factors do exist. Any correction in global financial markets will lead to increased exposure in gold by investors. Efforts to bring in further transparency to gold market products will also ensure better investor participation.

All the above trends clearly support heightened gold demand in 2018. These trends will continue to make gold an attractive and strategic investment opportunity which may yield positive returns over the long run.