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Gold To Perform As Returns Of Other Assets Unpredictable, Says World Gold Council

Even as interest rates turn negative and markets become uncertain, gold has emerged a safe haven among major asset classes.

A red hot 28 kilogram gold bar cools after being removed from its casting mould in a foundry in South Africa. Photographer: Waldo Swiegers/Bloomberg
A red hot 28 kilogram gold bar cools after being removed from its casting mould in a foundry in South Africa. Photographer: Waldo Swiegers/Bloomberg

Even as interest rates turn negative and financial markets enter phases of uncertainty across the world, gold has emerged a safe haven among major asset classes over the past 10 months.

Demand for gold is expected to increase further globally, said Joseph Cavatoni, managing director of World Gold Council U.S., adding prices of the yellow metal surged nearly 25 percent in the same period.

Gold To Perform As Returns Of Other Assets Unpredictable, Says World Gold Council

“When you have negative real rates in 70 percent of the developed markets, you’re going to look for assets that can actually do what you need in your portfolio,” he told BloombergQuint in an interaction.

Global gold demand rose 8 percent over last year to 1,123 tonne in the second quarter of 2019, he said. The rest of the year and 2020 are going to be ideal to increase demand levels worldwide, he said, with geopolitical risks and inability of investors to be confident about of other asset return predictions driving its consumption.

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Gold To Perform As Returns Of Other Assets Unpredictable, Says World Gold Council

The World Gold Council, he said, is monitoring global developments. “While we’re definitely paying attention to what the U.S. Federal Reserve would do with rates… nearly 50 percent of the demand for gold comes from India and China,” he said. “So, you have to take into consideration this is a global asset.”

The council recently released the blueprint for “India Spot Gold Exchange”, for which it’s collaborating with 27 peers around the world. That, according to Cavatoni, would put India on a path to develop a transparent market for understanding price discovery and make the nation a significant trading hub.

Watch the interview here

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