The World Gold Council publishes 2019 "mid-year outlook"

The World Gold Council published its "mid-year outlook" for 2019.

The WGC explained that there are four attributes that make gold a valuable strategic asset, by providing investors with a source of return; low correlation to major asset classes in both expansionary and recessionary periods; a mainstream asset that is as liquid as other financial securities; and a history of improved portfolio risk-adjusted returns. These attributes, the WGC reported, are "by-products of the dual nature of gold as a consumer good and an investment."

As such, gold's performance is well explained by its supply and demand dynamics. Gold demand is linked to jewellery, technology and long-term savings, and these are important determinants of long-term performance. In the short and medium term their impact is felt predominantly when there are significant changes to demand. Conversely, gold investment demand amidst higher uncertainty - including speculative activity - can sway prices in a meaningful way in the short and medium term but its effects level off in the long run. In addition, gold supply through mining or recycling bring balance to the market.

Looking forward to the rest of the year, the WGC expects consumer demand to be soft and speculative activity could amplify price movements but, overall, it is likely that investment demand will remain robust and central banks will continue their net purchasing trend.

The WGC also expects that during the next 12 months the financial market's uncertainty and accommodative monetary policy will support gold investment demand; that gold's price momentum and positioning may fuel rallies and create pullbacks, as investors continuously re-assess their expectations based on new information.

In the short term, weaker economic growth may possibly soften gold consumer demand, but that on the long term, the structural economic reforms taking place in India and China will support demand in those markets.