According to a dozen money managers, gold’s attraction isn’t fading and that they want to keep or increase their exposure to the precious metal in the next year. Bullion has struggled in recent weeks, owing to a variety of headwinds ranging from rising real yields to a stronger US currency and the probability of US …
According to a dozen money managers, gold’s attraction isn’t fading and that they want to keep or increase their exposure to the precious metal in the next year. Bullion has struggled in recent weeks, owing to a variety of headwinds ranging from rising real yields to a stronger US currency and the probability of US interest rates remaining higher for an extended period of time. Investors surveyed, ranging from sovereign wealth managers to hedge funds, expressed cautious confidence about price predictions through 2024.
None of the respondents indicated they planned to reduce their gold exposure in the next 12 months, and some said they planned to increase their allocations. More than two-thirds anticipate prices to rise, with five expecting an all-time high. The survey was conducted between August 10 and August 22.
There is still much doubt about when the Fed will complete its tightening cycle, which would be a significant positive for non-interest-bearing gold. Global central banks are still grappling with persistent inflation, and the US labor market has been unexpectedly robust in the face of strong monetary tightening.
While there are some indicators that investors are ready for higher rates to last longer, the swaps market is still pricing in no more rate rises and a change to policy easing next year.
Bullion is presently trading about $1,900 per ounce, down roughly 8% from its top this year. It will reach a high of around $2,075 in August 2020, in the midst of global economic crisis caused by the Covid-19 epidemic.
To be sure, economists are becoming more optimistic that the US economy will suffer a gentle landing, a significant departure from commonly held beliefs early this year that the economy would endure a harsh collapse.
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Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.
