New data from the World Gold Council shows that, despite slowing global growth, demand for gold bars and coins looks to have actually increased by around 4 percent in 2018.
The Central Banks
Last year, gold may have been challenged by the Dollar and rising interest rates in the U.S., but this did not prevent many buyers from turning to our favourite precious metal. Gold bullion purchases actually saw a significantly large increase from the global central banks and even reached a new record.
The US Dollar gained strength in 2018 which would normally undercut gold’s appeal. However, the world is currently being shaken up politically by trade wars, sanctions, and the uncertainty over Brexit. China was stuck in a trade war with the U.S. and are said to have added around 10 tonnes at the end of last year. Russia faced U.S sanctions and also became the biggest central bank buyer, reportedly buying around a huge 274 tonnes of the precious metal in 2018.
Is it me, or does it seem as if the central banks are using gold as a way to hedge risks, much like us smart everyday investors do?
What does this mean for the future?
Central bank demand for gold signals a growing confidence in the metal, which in turn can push prices upwards. The banks are reportedly expected to acquire even more of our favourite precious metal this year – we’ve heard up to an additional 600 tonnes - to help diversify their assets due to this current volatile political environment.
Gold is currently, at the time of writing this, sitting at just over £1000 per oz. Gold is up year on year, the spot price has risen over the last week and dare I say it looks like it could be heading for another gain?
Could 2019 be looking good for gold? I guess we’ll have to watch & see.
This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.