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  Business   In Other News  27 Aug 2018  Gold prices likely to rise on growth woes

Gold prices likely to rise on growth woes

THE ASIAN AGE.
Published : Aug 27, 2018, 12:22 am IST
Updated : Aug 27, 2018, 12:22 am IST

In India, WGC said the gold premiums have turned positive again, suggesting a tilt towards buying.

According to WGC, the effects of trade sanctions so far have mainly affected emerging markets such as China or Turkey, but expanding or maintaining sanctions for a longer period will likely damage global growth.
 According to WGC, the effects of trade sanctions so far have mainly affected emerging markets such as China or Turkey, but expanding or maintaining sanctions for a longer period will likely damage global growth.

Mumbai: While the prices of gold in the international market has dropped to a 20-month low despite geopolitical tension and trade war concerns, the World Gold Council (WGC) believes that the yellow metal could bounce back if any of the current developments impacts global growth.

Additionally, it added that the recent price pullback will likely support consumer demand as historically lower prices have increased jewellery buying.

 

The gold price has slipped below the $1,200 per ounce, an important technical support level – for the first time since early 2017. Gold was propelled down by the strength of the US dollar against both developed and emerging market currencies, particularly, the yuan and lira.

In fact, the dollar’s strength has been one of the most important drivers of gold’s performance this year as confrontational trade rhetoric and sanctions has so far played in favour of the US. According to WGC, the effects of trade sanctions so far have mainly affected emerging markets such as China or Turkey, but expanding or maintaining sanctions for a longer period will likely damage global growth.

 

It noted that developed market economies are heating up. Increasingly nationalistic economic policies in many countries, combined with a desire by some governments, to maintain competitive currencies by means of low interest rates, may result in higher inflation.

“Although European economies are expanding, risks – ranging from Brexit negotiations to financial institutions’ exposure to emerging market debt – may create a spillover effect that, to date, has been averted. The past has shown that any of these risks can be the catalyst that elicits strong investment demand,” it said.

In India, WGC said the gold premiums have turned positive again, suggesting a tilt towards buying. While the monsoon has brought devastating floods to parts in South India, expectations remain positive for the second half of this year as consumers prepare for their traditional buying period.

 

Tags: gold prices, world gold council