• 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).
• It 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.
• 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.
• 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.
• 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.
Mains Paper 2: IR | Important International institutions, agencies & fora, their structure, mandate
Prelims level: WGC
Mains level: Effect of global trends on India’s gold trade