The year 2018 has just begun. What will a new year bring for the gold market?
Macroeconomic outlook will remain unpleasant
The current economic expansion is surprisingly durable, as it has already lasted more than 100 months. It worries many investors who are afraid of the upcoming recessions. Surely, there are many reasons to worry, and the recession will eventually come. But we are not at this point yet. The current expansion is unusually long, but it is exceptionally sluggish. This year we expect that the global economic growth will continue. Actually, it may even accelerate and become more synchronized among countries.
Moreover, with relatively strong business momentum, the labor markets in advanced economies should strengthen further. And although inflation is likely to rise, it will remain low. Hence, the macroeconomic outlook will remain unpleasant for the gold market, as the yellow metal prefers periods of economic turmoil or stagnation.