Financial market uncertainty and adaptive monetary policy will continue to support investment demand for gold in the short term, according to a study published Thursday by the World Gold Council (WGC).
In its mid-term gold outlook for 2019, the industry body says that price movements (gold increased by 11% this year) and structural economic reforms in India and China will also be key drivers of demand for the precious metal.
Signs of increasing monetary policy by central banks around the world have recently significantly supported gold. In addition to the 247 tons that these institutions bought directly during May, market expectations that the US Federal Reserve will cut interest rates two or three times later this year should continue to stimulate demand, WGC reports.
And although the Fed may not do what the market asks for, it usually doesn’t like to amaze either, says the WGC.
Gold has already become one of the most efficient assets this year, and exchange-traded funds, financed by bullion, raised $ 5 billion, it says.
Along with signs of worsening global economic growth, the WGC highlights a number of risks that may arise in the coming months to force politicians to weaken policies. These include growing trade disputes between the US and its trading partners, especially with Iran, as well as the influence of Brexit and other economic and political issues in Europe.
“As we look forward to the end of the year, we believe that consumer demand may be weak, and speculative activity may increase the price movement, but overall, it is likely that investment demand will remain high, and central banks will continue their trend towards net purchases, clarifies the Council
