Gold is a valued commodity around the globe. Its price may fluctuate, but it's never arbitrary – many types of current events and economic trends factor into whether the price of gold increases or decreases. It’s probably safe to say that these variables were plentiful throughout 2018, so it’s no surprise that it was certainly an interesting year for gold prices.
In an annual report from the World Gold Council (WGC), the organization analyzed the economic trends and market factors that influenced the price gold, what investors and speculators can expect from the market in 2019, and the “why” behind it all. You can read the full report by visiting the WGC’s website, but some of the key findings, takeaways, and predictions we found to be interesting are:
- Gold prices started strong in 2018, but were negatively affected from about April to October as the USD got stronger and the Federal Reserve increased interest rates while other countries remained accommodative. Due to large sell-offs of company stocks and political uncertainty stemming from the US midterm elections, gold prices managed to rally in the fourth quarter.
- Central banks continue to buy gold to diversify their foreign reserves and hedge against fiat currency risk. This is particularly true of central banks in emerging markets, which tend to have high allocations of US treasuries. Central bank demand for gold in 2018 alone was the highest since 2015, as a greater variety of countries added gold to their foreign reserves.
- Factors to watch in 2019 include expensive valuations and higher market volatility, political and economic instability in Europe, potential higher inflation from protectionist policies, and the increased likelihood of a global recession.
Do you think the WGC’s predictions for 2019 are accurate? Don’t forget, you can keep track of the latest gold pricing trends (and calculate the estimated value of any scrap or bullion you're holding) on your phone with the MGS smartphone app!