WGC Identifies Key Trends Likely to Drive Gold Price in H2 2018

SEATTLE (Scrap Monster): The World Gold Council (WGC) has published its Mid-Year Outlook Report, which analyzes the macro trends that are likely to influence gold’s behavior during the second half of 2018. The report, which outlines the performance till date this year, also outlines the key drivers of gold prices.

According to WGC, financial markets across the world reported eventful first half in 2018, mainly on account of rising geopolitical risks. Gold has moved in the opposite direction, rising by nearly 4% during the opening months of the year. However, all the gains were wiped off by June. The downward trend in gold prices continued in July as well. The lackluster performance was mainly on account of strengthening U.S. dollar and drop in demand for physical gold in main consumer countries such as India and China.

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The positive macroeconomic trends during the second half of the year are likely to give support for gold from key regions. The likely possibilities of economic expansion in China and support to gold markets from India on account of upcoming wedding season and robust monsoon will prove positive for gold. The anticipated expansion of the U.S. economy may also result in increased demand for gold and gold jewellery. On the other hand, European markets may continue to remain soft during H2 2018.

The recent pullback in gold prices is likely to boost consumer purchases, as low prices generally tend to trigger buying interest. As per market participants, the current price of gold provides attractive entry levels for long term investors. This is evident from the rise in investment demand towards the end of Q2 this year. Incidentally, gold prices had recorded thier lowest volatility levels in 2017. The traditional buying in September coupled with rebalancing of portfolios ahead of year-end could also be supportive of gold demand, WGC noted.