– Four key themes to drive gold prices in 2018 – World Gold Council annual review
– Monetary policies, frothy asset prices, global growth and demand and increasing market access important in 2018
– Weak US dollar in 2017 saw gold price up 13.5%, largest gain since 2010
– “Strong gold price performance was a positive for investors and producers, and was symptomatic of a more profound shift in sentiment: a growing recognition of gold’s
role as a wealth preservation and risk mitigation tool”
– China’s gold coins and bars market recorded its second-best year ever
– German, central bank and technological demand supporting gold prices
– Latest Goldnomics podcast explores these and other themes
Editor: Mark O’Byrne
Annual Review 2017 has just been released by the World Gold Council (WGC) and it’s annual report on the gold market and the outlook for gold prices is fact based, comprehensive and well worth a read – especially the section ‘Market Outlook for 2018’.
2017 was a relatively quiet one for gold prices, which was surprising given the increasing tensions and turbulence going on in the rest of the financial and particularly political spheres. The World Gold Council’s comprehensive analysis strongly suggests that the set up for gold is very positive and we are on the verge of further gains in the coming years.
This is also our own view which we expanded upon in the just released latest Goldnomics podcast (Episode 3).
Gold demand fell slightly but supply was also down
2017 was a challenging year for gold demand: it fell to its lowest level since 2009. Investment and central bank demand accounted for most of the decline.
There were two interesting positive increases in gold demand in 2017; central banks and the technology industry. Whilst central bank demand did decline from the previous year, it was still notable.
According to the World Gold Council we are set to see both of these factors rise in 2018 which bodes well for gold prices.
Central banks continue buying as tensions rise between West and East
Last year made for the eighth consecutive year that central banks added to their gold reserves. As mentioned in our latest podcast this demand is high, but it could increase even more given the level of foreign exchange reserves.
Just this last week the news broke that the Russian central bank added a further 18 tonnes to their gold reserves. By way of reminder this is the bank that last year said it was stocking up on gold in order to “beef up national security.”
2017’s most notable central banks buying gold were Russia, Turkey and Kazakhstan. The former two having made some bold statements in recent times about protecting themselves from US dollar hegemony.
China, Russia, Iran and more recently Turkey have made no secret of their desire to operate outside of the financial and monetary control mechanisms the U.S. has managed to control for so long. China (another major central bank buyer) is the most important in this regard but each of these countries have actively encouraged private gold ownership as well as national, in order to reduce their reliance on and exposure to the US dollar.
Interestingly, the WGC highlight China’s phenomenal gold buying record which rose again once again in 2017 to the second highest level on record.
