Will gold shine amidst market and economic growth expectations?
Gold faced significant headwinds for most of 2018 as a strong dollar, Fed rate hikes and a US economy buoyed by tax cuts fueled positive investor sentiment. However, as geopolitical and macroeconomic risks increased and stock markets sold off, gold closed strong, ending the year near US$1,280/oz and outperforming most global assets.
Looking ahead, we expect gold demand to benefit from the interplay of market risk and economic growth. Specifically, we examine three key dynamics likely to influence how gold performs in 2019:
• financial market instability
• monetary policy and the US dollar
• structural economic reforms
Against this backdrop, gold is likely to become even more relevant due to its proven track record for delivering returns, low correlation to major asset classes, and diversification opportunities.
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