09 November 2016•Update: 09 November 2016
ANKARA
The demand for gold will considerably increase in the coming years in accordance with rising political instability among advanced economies, the World Gold Council said in a report released on Wednesday following the surprise U.S. election result.
Juan Carlos Artigas, director of the council’s investment research, noted the trend of rising argumentative politics among developed countries.
"This trend, combined with uncertainty over the aftermath of years of unconventional monetary policies measures, will firmly underpin investment demand for gold in the coming years," Artigas said.
He pointed out that financial markets fell sharply in response to Donald Trump’s election victory in the U.S. while equity markets also went down, notably in Asian and early European trading.
"Gold has by contrast increased, outperforming other assets, including other safe havens. It is currently trading at over $1,300/oz [per ounce], compared with $1,275/oz before the vote counting began.
"Short-term volatility in the wake of this election is inevitable, as it signals a major political and economic change. Gold trading volumes have risen sharply in Asia," he said.
Gold traded at $1,303.56 per ounce at 5.10 p.m. Ankara time (1410GMT).
Artigas said the global economic environment was supportive of gold due to the prevailing high political risks in advanced economies.
"The pound sterling has plummeted by more than 15 percent since the U.K. voted to leave the EU. There is still no clear road map out of Europe," he added.
On Europe's worsening problems, Artigas said the continent, where many anti-establishment and populist parties now thrive, would shortly enter election season next year.
"Elections in Italy, France, Germany and Holland could see these parties significantly increase their vote share. In our view, the intense political uncertainty, that advanced economies now face, will make gold particularly valuable to investors," he said.
He said gold was the only de-facto currency that could not be debased by printing more of it, and the only one that did not carry political risk.
