Baku.16 January. REPORT.AZ/ The World Gold Council analyzed the global economic trends and their impact on gold in its 2018 outlook report.
Report informs referring to the World Gold Council, four main directions have been identified among these trends.
The first of them is implementation of synchronized global economic growth in 2018.
The report says that the European and US economies will be expanded, and unemployment will be fallen in the coming years. Wages are rising yet inflation indices are low. China and India’s economy - the world’s largest gold markets - will continue to grow and increase the demand in gold. Growth of global welfare will increase the consumers' expenditures, demand in gold and investments in gold industry.
Secondly, shrinking balance sheets and rising rates of Central Banks. Continued global economic expansion will likely result in tighter monetary policy. The Fed will take the lead as it seeks to shrink its swollen balance sheet - it plans to let $ 50 billion of treasuries and mortgage-backed securities mature each month, and it is anticipated that by 2020 its balance sheet will decrease to around $ 2 trillion, having been at $ 4.5 trillion.
Higher interest rates decrease the investments in gold. Thus, gold is a financial instrument that does not bring any dividend.
Over the past decade cheap means that entered the financial markets increased many assets. The report says varying interest rates of Fed between 0-4% may bring positive revenue to gold investors. Increasing interest rate does not always have negatively impact on gold. Gold help those who invested in it, to manage the risks of financial market.
Thirdly, frothy asset prices. The historical record levels have been registered on assets in 2017 particularly in US share market. This trend will also continue in 2018. After a while, financial markets will face concern. Should global financial markets correct, investors could benefit from having an exposure to gold as it has historically reduced losses during periods of financial distress.
The fourth direction is market transparency, efficiency and access. Over the past decade financial markets have considerably improved in this direction. Simplification of access to gold market increases the investment opportunities and make gold attractive as a strategic investment.