Gold prices seem to be staying strong and may even be set to climb up even further, as the global economy appears to be slowing, and the risk of a possible recession seems more likely.
In the USA, damage from President Donald Trump’s trade war is still taking a big toll, and it is reported that the Federal Reserve's tracking estimates that the current GDP growth could have slowed to even half of what it was in late January.
The UK economy lost momentum in the last quarter of 2018, with a growth of only 0.2%. Political uncertainty is rife here in Britain, with the ongoing to-ing and fro-ing over Brexit. Theresa May is currently under pressure, with reports today suggesting she may even decide to delay Brexit rather than leave the EU if there is still no deal in place by the end of March. We also read that spending and investment are being held back by Brexit uncertainty, which has impacted businesses and consumer confidence negatively.
China’s economy has slowed considerably, with a growth of around 6% in 2018 being the slowest for the country since 1990. China is a key export market for Germany, who themselves are having a tough time financially, and Japan’s manufacturing output has contracted.
Flocking to Gold
We are not stating, by any means, that a recession is instantly around the corner – but the risks of this decline in the global economy should possibly mean we keep a very close eye on our favourite precious metal. Amidst the world’s political and economic uncertainty, the gold price has already surged by around 14% since early October 2018.
At a time of anxiety over economic growth and trade conflicts, investors look to be taking a renewed shine to gold. As we know, gold will always hold value, and we tend to flock to its relative safety in these times of geopolitical and financial uncertainty. Even the central banks seem to be getting a little twitchy, as we have seen a significantly large increase in gold bullion purchased by the global central banks recently.
So, in light of such political uncertainty, as well as a lack of faith in the world’s economic prospects, we look to our safe haven – gold. In this time of possible decline, it looks like gold could be expected to go only one way, right?
And that way, hopefully, is up.
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.