Weaker dollar may help gold in 2019: Council

January 21, 2019

Published by Harvest Exchange Traded Funds

Three trends will influence the price of gold in 2019, according to the World Gold Council.

The industry group sees volatility in world stock markets, a weakening U.S. dollar and structural economic reforms in some countries as reasons why gold has an increasingly relevant role to play in investors’ portfolios.

The Council’s 2019 outlook notes that gold’s price seesawed in 2018 as investor interest ebbed and flowed despite steady growth in demand for jewelry, bullion and industrial use.

There were significant headwinds for most of the year. The U.S. dollar strengthened, the U.S. Federal Reserve raised rates while other central banks kept policy accommodative, and the U.S. economy was lifted by the Trump administration’s tax cuts.

These factors fuelled positive investor sentiment which, in turn, pushed U.S. stock prices higher, at least until the start of October.

But as geopolitical and macroeconomic risks continued to increase, emerging market stocks pulled back. Eventually, developed market stocks followed, in a selloff led by US tech companies.

This resulted in short-covering in gold with its price ending the year near US$1,280/oz , down 1% year over year. For the full report, click here.

In related news, Goldman Sachs analyst Jeffrey Currie said in a note to clients he expects gold will be supported this year by growing demand for defensive assets. As quoted by CNBC, he also said central banks have more incentives to re-enter the gold market as geopolitical tensions rise.

In January, Harvest Portfolios Group Inc. launched the Harvest Global Gold Giants Index ETF (TSX: HGGG) to take advantage of higher gold prices. HGGG will track the 20 equally weighted positions of the Solactive Global Gold Giants Index (TSX: HGGG) primarily invests in large gold mining issuers listed on stock exchanges in North America, Australia, and Europe.

For more on Harvest Portfolio Group,  click here.

The views and/or opinions expressed in the blog are of a general nature and are for informational purposes only. Blog contents should not be considered as advice and/or a recommendation to purchase or sell the mentioned securities or used to engage in personal investment strategies. Investors should consult their investment advisor before making any investment decision.  

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