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Outlook 2019 Economic trends and their impact on gold

Will gold shine amidst market and economic growth expectations?

Gold faced significant headwinds for most of 2018. A strong dollar, Fed rate hikes coupled with accommodative policy from other central banks, and a US economy buoyed by tax cuts fuelled positive investor sentiment and pushed US stock prices higher through the start of October. However, as geopolitical and macroeconomic risks increased, stock markets sold off and the gold price ended the year near US$1,280/oz 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, we believe gold will become even more relevant due to its proven track record for delivering returns, its low correlation to major asset classes, its liquidity, and risk-adjusted returns.