yellow Metal’s safe-haven status remains unchallenged
Mumbai : Synchronised global economic growth, shrinking central bank balance sheets and market efficiency will support demand for gold and maintain its relevance in 2018, the World Gold Council (WGC) said in a report. “As incomes rise, demand for gold jewellery and gold-containing technology rises…Income growth also spurs savings, helping increase demand for gold bars and coins,” the report said. Though China’s economy may grow at a slower rate, the growth is seen more balanced.
In India, demonetisation and the implementation of the goods and services tax are seen having a positive effect on the Indian economy this year. Economic growth in the two largest gold consumers is seen positive for the yellow metal. With equity markets having risen to multi-year highs in 2017, investors are wary about a likely correction this year. This might lead some of them to increase their exposure to safe-haven gold to reduce losses. The London Metal Exchange launched LMEprecious to improve price transparency and efficiency of transacting in the London market, it said. India, the world’s second-largest gold consumer, is also taking steps to build a national spot exchange for gold and looking at introducing mandatory jewellery hallmarking. Russia has drafted an amendment proposing an exemption of the 18 per cent value added tax on purchase of gold bars. “If approved, it may herald the development of a new gold investment market,” the WGC report added.
