In its mid-year gold outlook 2019, the Gold Council identified three factors it believes will drive demand for gold. 

• Financial market uncertainty and accommodative monetary policy 
• Price momentum and positioning leading to market rallies and pullbacks
• Structural economic reforms in India and China 

In particular, central bank policy is likely to play a significant role. Aside from the 247 tonnes of gold purchased directly by central banks through May, market expectation that the US Federal Reserve will cut interest rates two or three times later this year is also a factor. 

A cut in interest rates would fuel both the ongoing stock market rally and low bond returns - both factors which make gold more attractive. Gold already became one of the best-performing assets by the end of June, and gold-backed exchange traded funds have captured $5 billion. 

"The prospect of lower interest rates should support gold investment demand," said the council. "Alternative high-quality, liquid assets such as gold may help investors balance risks more effectively, while providing uncorrelated long-term returns."

More broadly, increased perception of risk also helps gold. Some of the risks identified by the WGC include higher tariffs amid trade tensions between the US and other countries, geopolitical tension between the US and Iran, and uncertainty surrounding Brexit and other political and economic concerns in the UK and Europe.

The WGC noted that despite high stock valuations, in the event of an economic downturn, central banks would not be able to reduce interest rates much further (as they are already so low), meaning that more quantitative easing would be required, and possibly other measures that have not been tried before. That might also drive investors to gold.

Finally, although weak economic growth may hamper consumer demand this year, broad structural reforms in India and China will likely support long-term gold demand, according to the council. It also expects central bank gold demand to remain positive.

"As we look forward to the rest of the year, we believe that consumer demand may be soft and speculative activity could amplify price movements but, overall, it is likely that investment demand will remain robust and central banks will continue their net purchasing trend," it said.