2018 forecasts: UK investments in gold

Goldex Team

Editorial content

The evolution of gold value in the UK is at a pivotal moment. At some point in July we could see if gold hit the ground running in 2018, or if a major sales event is coming. Gold showed fierce resistance in early June at the beginning of the Riga and Fed Meetings which saw the announcement of at least two interest rate hikes in 2018 in the American market. With two more hikes expected in 2019, this had a significant impact on the expectations of potential buyers.

According to most economical forecasts, the growth of the recently expansive economies of the UK, Europe and USA, is set to decrease in 2019. Most predictions of a strong price for gold in 2017-2019 were based on this assumption. Yet, this analysis did not take into account the recent escalation of trade tensions between all the major economies.

The extent of these tensions is uncertain right now, but they are still a matter of concern for every major industry in an increasingly interdependent world. More recently, the sustained rise in oil prices, which reached 70 USD per barrel in June, confirms the outlook of diminishing economic growth for 2019. Yet, against this backdrop, the tenacity of gold brings reason for optimism.

Gold, always in fashion

On the domestic side, the demand of gold for jewellery grew a modest 1% in the first quarter of 2018. That might seem small, but it is a meaningful figure considering the fall of the price of gold in international markets in the same period. And despite the Brexit effect, gold value in the UK continues to resist the heat of local markets as the sale of jewellery maintains its pace. There is a general consensus within the jewellery industry that sales in the retail sector will be remain stable for 2018, supported by the recovery of the demand from Asia and India.

However, the steady volume of sales across the UK jewellery sector will not be enough to compensate the downward trend of the investment market; most analysts predict a minimum price of 922~945 GBP in the next weeks.

What all this means is that from a mid-term point of view, waiting to buy gold at the lower value seen in 2018 could be highly rewarded in 2019, by which time when the rarefied economic environment will shift the focus of investors once more, and it is expected they will again see gold as a refuge of wealth in volatile times.