INSUBCONTINENT EXCLUSIVE:
Retail investment is forecast to rise in 2018 following four consecutive years of declines: Survey
London: Gold in 2018 will deliver its strongest annual price performance in five
years, GFMS analysts forecast on Tuesday, as political uncertainty drives investment in bars and bullion-backed investment funds
The GFMS metals research team, a unit of Thomson Reuters, predicted gold would average $1,360 an ounce this year, up 8 percent from 2017,
with some short-term moves towards $1,500
Gold has not risen above that level since early 2013
"Uncertainty revolving around President (Donald) Trump's politics, along with ongoing tensions in the Middle East and Brexit negotiations
will remain gold's key drivers," the team said as it released its Gold Survey 2018.The team expected demand by exchange traded funds (ETFs)
to rebound this year to 350 tonnes."Retail investment is forecast to rise in 2018 following four consecutive years of declines, thanks to a
pick-up in bar demand, supported by improving sentiment towards gold and rising price expectations," GFMS said.Adding to the bullish
picture, the Chinese central bank was expected to resume purchases, GFMS said, leading to a rise in net official sector demand this year to
more than 400 tonnes for the first time since 2015.The Chinese central bank, once a major buyer of gold, has not reported any additions to
its reserves since October 2016.ETF demand totalled 177 tonnes last year, GFMS said, while physical gold demand, including buying of
jewellery, coins and bars, rose 10 percent, its first annual increase since 2013.That was driven by a 13 percent climb in jewellery
fabrication, its first annual rise since 2013, with demand in the world's second largest consumer India particularly strong before the
implementation of a new tax regime mid-year.Jewellery fabrication in East Asia, which includes number one consumer China, fell for a fourth
year in a row to its weakest in five years, with a drop in Chinese fabrication accounting for the bulk of the drop, GFMS said.Overall,
China's gold demand was down 3 percent in 2017 and Chinese consumption was expected to weaken further this year, GFMS said, citing
structural changes in the jewellery industry which have seen retailers focus on higher-margin products.Global bar demand was expected to
rise 1 percent, recovering after falling for four years in a row, while coin demand was forecast to remain subdued after falling in 2017 to
its weakest since 2007, GFMS said."The continual increase in the gold price has kept bargain hunters on the sideline, as coin investors are
usually the most price sensitive in the market," it said."The improving sentiment over the economic outlook, particularly in the United
States, have investors less interested in gold coins as their risk appetite increased."Mine production edged lower last year for the first
time since 2008, GFMS said, totalling 3,247 tonnes.In 2018, the team said it expected mine output to hit a record 3,265 tonnes
"We expect Asian countries such as Indonesia, Mongolia and China to contribute to gains in the current year, accompanied by Russia,
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