Both the Indian and Chinese economies are going great guns, albeit at a slower rate than before. They will continue to be pivotal to gold demand in the coming months. Emerging markets, making up 70% of gold consumer demand, are very relevant to the long-term performance of gold. And among these, India and China stand out. These two countries have begun to implement economic changes necessary to promote growth and secure their relevance in the global landscape. Let us look at some practical instances. China’s Belt and Road initiative (BRI) is focused on promoting regional economic development, boosting commodity markets and upgrading infrastructure. India has been active in modernising its economy, reducing barriers to commerce and promoting fiscal compliance. In fact, India’s economy is expected to grow by 7.5% in 2018 and 2019, outpacing most global economies and showing resilience to geopolitical uncertainty.

Given its unequivocal link to wealth and economic expansion, gold is well poised to benefit from these initiatives. We also believe that gold jewellery demand will strengthen in 2019 if sentiment is positive, while increase marginally should uncertainty remain. Efforts to promote economic growth in western markets are expected to result in positive consumer demand, as has been observed generally in the US since 2012. Gold’s performance in the near term is heavily influenced by perceptions of risk, the direction of the dollar, and the impact of structural economic reforms. As it stands, we believe that these factors likely will continue to make gold attractive.

In the longer term outlook, gold will be supported by the development of the middle class in emerging markets, its role as an asset of last resort, and the ever-expanding use of gold in technological applications. This includes economies like India, China, Indonesia, Turkey and Nigeria with a growing middle class. In addition, central banks continue to buy gold to diversify their foreign reserves and counterbalance fiat currency risk, particularly as emerging market central banks tend to have high allocations of US treasuries. Central bank demand for gold in 2018 alone was the highest since 2015, as a wider set of countries added gold to their foreign reserves for diversification and safety. Gold is a favourite investment by all and sundry in India. High liquidity and inflation-beating capacity are its strong selling points, not to mention beauty, prestige and so on. Though, there are phases when markets witness a fall in gold prices, it never lasts and always makes a strong comeback.