| World Gold Council (WGC) It is a global market development organization for the gold industry. Founded in 1987 and headquartered in London, the WGC works to promote gold as an asset and drive demand in sectors like investment, technology, and jewellery. It set standards. It also publishes authoritative research on global gold markets. It is behind the SPDR Gold Trust (GLD) exchange-traded fund. |
- Amidst geopolitical tensions and economic uncertainty, gold prices have reached record highs.
- Gold is favoured during geopolitical or economic instability due to its low correlation with other assets, offering stability when markets face downturns.
- Generally, higher interest rates make gold less attractive since it offers no yield, while lower rates and a weaker dollar increase its appeal as a safe asset. However, exceptions can occur due to inflation and geopolitical events.
- Central banks buy gold to hedge against uncertainties and diversify foreign reserves.
- As of August, net purchases were recorded at 8 tonnes, with notable acquisitions from Turkey, Poland, and India.
- Gold’s finite nature and the lengthy process from discovery to production (often decades) make it difficult for supply to adjust quickly to market changes.
- The World Gold Council notes an increase in demand from rural areas
- Due to favourable monsoons and better crop yields, boosting rural incomes and gold purchases.
- The reduction in gold import duties in July has stimulated demand in India.
- Gold demand remains high in India during the festive and wedding seasons.
Dig Deeper: Read about other acquisitions of central banks to hedge risk amid an uncertain environment.
