Gold Demand in 2019 to be Driven by Market Risks and Economic Growth

SEATTLE (Scrap Monster): The recent report released by the World Gold Council (WGC) provides detailed analysis of the gold market in 2018 and presents the potential for growth in 2019. According to the report, gold faced considerable headwinds during most of 2018, resulting in high price volatility. Going ahead, the interplay between market risk and economic growth is likely to drive gold demand in 2019.

The three key factors that may determine gold prices in 2019 are financial market instability, monetary policy and the U.S. dollar, and structural economic reforms by emerging countries, WGC notes.

The Council sees limited impacts to gold as a result of headwinds from higher interest rates and U.S. dollar strength. The expansion of protectionist economic policies and increase market uncertainties are likely to increase gold’s appeal as a hedge. Coupled with this, structural economic reforms in key markets will continue to support gold demand in jewellery, technology and also as a means of savings.

The economic reforms aimed at promoting growth undertaken by emerging economies, especially China and India will lend support to gold’s long-term outperformance. China’s Belt and Road Initiative, focused on providing regional economic development, is likely to provide big boost to commodity markets. The projected 7.5% growth to Indian economy in 2019 is likely to foster gold demand in the country. Incidentally, India and China are the world’s largest gold consumers.