SEATTLE (Scrap Monster): The World Gold Council (WGC) published a new report that highlights gold’s relevance as a strategic asset in 2022.
According to WGC, gold benefits from diverse sources of demand- as an investment, a reserve asset, jewellery and a technology component. Also, gold does not directly conform to the majority of the most common valuation methodologies used for other asset classes such as equities or bonds.
The price performance of gold could be explained by interaction of two strategic drivers-economic expansion and risk & uncertainty. The periods of economic expansion tend to be supportive of jewellery, technology and long-term savings. The downturns in markets often boost investment demand for gold as a safe haven.
WGC noted that inflation had been a prominent global theme throughout the previous year. It will continue to be a key input into investor decisions during the current year as well. Central banks around the world acknowledge that inflation is likely to stay longer, which in turn will lead to higher rates. Meantime, China, India and ECB are expected to stick on to accommodative policies.
The Council noted that gold has outperformed during central bank hiking cycles and that it has been an effective hedge against inflation.
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