Gold Market Outlook: Q2, 2018 - Gold Demand Remains Under Pressure, Italy May Decide to Call for Referendum on Leaving Euro Zone - ResearchAndMarkets.com
DUBLIN--(BUSINESS WIRE)--Nov 16, 2018--The “Gold Market Outlook - Q2, 2018” report has been added to ResearchAndMarkets.com’s offering.
Having reached an interim high of $ 1,351.45 on April 18, the gold price came under pressure loosing 4% to a current stabilized level between $ 1,290 - $ 1,300. This can be accounted for by increasing interest rates in the US, as well as the launch of bitcoin, the big story in 2017, putting the spotlight on the booming cryptocurrency market.
Q1 2018 gold demand was down 7% to the lowest Q1 since 2008.
The US dollar recovered against the Euro from 1.23 on March 21, 2018 to a current level of 1.17, corresponding with a gain of 5%. Although showing a direct relationship between the course of gold and dollar, measured over a longer period, gold historically appears not to be a consistent investment hedge against the dollar. Surprisingly, this in particular applies to during the financial crisis of 2008-2009 (see overview below).
An expected negative Trump-effect on the dollar to the benefit of gold has proved to be premature.
The America first policy is in line with most EU members as a priority policy defending their national economic interests.
Also, China is following an economically protective policy.
The United States trade deficit in goods without services was $ 800 billion in 2017.
Of this, US trade deficit with China was $ 375 billion in 2017. Exports to China were only $ 130 billion, against imports from China $ 506 billion. The huge gap justifies the announced protective measures by the Trump administration.
In this respect, it is striking to see that while in the European Union an anti-America sentiment has come into existence, which after Brexit the anti-Europe Italy sentiment will further weaken its international geopolitical position, China has chosen for a policy of common sense by offering to cut the annual trade surplus with America by $ 200 billion.
The dramatic outcome of Italy’s elections has resulted in the installation of an anti-Europe coalition, which is looking for an Italy First policy. This includes the country’s request of a write-down of 10% on its total 2,200 billion debt. The European Central Bank is holding 341 billion of Italian government bonds.
By lending 210 billion France is the biggest single currency holder, which makes it financially vulnerable.
The politically disastrous developments in Italy will lead to a confrontation with the EU on both outstanding political (against Russia sanctions) and economic issues (not following EU financial directories).
The installed new anti-Europe Italian government also wants to introduce a second domestic currency, thereby preluding the end of the Euro as a single currency in all economically weak EU countries.
Key Topics CoveredTrade war: return of protectionism China predicted biggest economy by 2050 With demand remaining under pressure, global geopolitical turmoil will be gold’s strongest market driver Bar and coin demand weakening as a result of a relative lack of price volatility ETF inflows of 32.4 tonnes down 66% Further decline of China’s gold output in Q1 2018 Gold from fundamental perspective of supply and demand Top 10 countries - consumer demand in 2017
Companies FeaturedBitcoin Buttonwood Investment Holding Co China Development Bank China Development Capital Co China Gold Association China Investment Corporation Export-Import Bank of China World Gold Council
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Related Topics:Precious Metals
INDUSTRY KEYWORD: NATURAL RESOURCES MINING/MINERALS
SOURCE: Research and Markets
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PUB: 11/16/2018 05:14 AM/DISC: 11/16/2018 05:14 AM