UBS: 'Gold Interest In China Could Increase Next Year'

Tuesday December 13, 2016 08:35

Chinese gold demand may well pick up next year, says UBS. After a recent trip to the country, analysts described sentiment there toward gold as “relatively neutral to tentatively positive.” Many market participants expect gold to climb next year but are cautious about getting involved yet ahead of a U.S. Federal Reserve policy meeting this week, year-end and uncertain outlook of the Chinese yuan. “Looking ahead, macro uncertainty and currency volatility in China, against a backdrop of relatively limited investment alternatives, could encourage local market participants to turn to gold,” UBS says. “As gold is still not considered a mainstream asset from an investment allocation standpoint, we think there's scope for growth from this sector. This could mean that although this year's softness in physical demand – particularly in the jewelry segment – could extend, overall gold interest in China could increase next year. Access to gold via electronic/mobile platforms continues to grow and this could mean more active trading for many retail investors up ahead.”