According to the organisation, in 2017, investors added gold to their portfolios with inflows into global gold-backed exchange-traded funds totalling US$8.2bn, while gold’s positive price momentum continued due to increased incomes and magnified uncertainty. Gold is considered a safe-haven asset and gets more expensive during market uncertainty.
Over the course of the year, the gold price rose across many major currencies. The Indian rupee and Chinese yuan gold price rose by 5.1% and 3.5% respectively, while in US dollars the gold price was up 13.5%, its biggest annual gain since 2010, outperforming all major asset classes other than stocks.
As 2018 begins, WGC expects that biggest price movers for gold will be such factors as synchronised global economic growth, shrinking central bank balance sheets and rising rates, frothy asset prices and market transparency.
WGC believes that these trends will support demand and maintain gold’s relevance as a strategic asset. The organisation also believes that the confluence of the key trends it has highlighted for 2018 could be supportive of gold demand.
As far as long-term perspective for gold is concerned, prices can get a boost from a range of factors. Gold has been a source of return for investors’ portfolios; its correlation to major asset classes has been low in both expansionary and recessionary periods; it is a mainstream asset that is as liquid as other financial securities and it has historically improved portfolio risk-adjusted returns.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough & Polished