Amundi, Fidelity and Pictet are among investors increasing exposure to gold despite expectations of higher US interest rates
Dubai: Some of the world’s largest asset managers are rebuilding their gold positions following the recent price decline, betting that the long-term case for the precious metal remains intact despite growing expectations of tighter US monetary policy.
Amundi, Europe’s largest asset manager, has increased its gold holdings in anticipation of the metal returning to $5,000 per ounce by the end of the year.
Fund managers at Pictet Asset Management, Robeco Institutional Asset Management and Fidelity International have also increased their holdings after reducing positions earlier this year during gold’s retreat from its record high.
Lorenzo Portelli, Head of Multi-Asset Strategy at the Amundi Investment Institute, said gold remains an asset the firm considers cheap, while also offering hedging benefits and reasonable liquidity.
However, he noted that Amundi would need greater clarity on the US Federal Reserve’s interest-rate path before considering further purchases following last month’s buying activity.
This view was reflected in interviews with more than 12 asset managers whose firms collectively manage $27 trillion in assets.
Without exception, all of them, including BNP Paribas Asset Management and Manulife John Hancock Investments, had either increased their gold holdings in recent weeks or maintained allocations reflecting expectations of further gains in the precious metal.
However, many money managers said any break above the resistance level gold has recently faced near $4,600 per ounce will not be easy.
Rising US Treasury yields and increasing expectations that the Federal Reserve could raise interest rates at least once more before the end of the year have weakened support for gold, an asset that tends to become less attractive when borrowing costs rise because it does not generate interest.
Investor confidence was also tested following remarks by Federal Reserve Chairman Kevin Warsh at the Jackson Hole symposium on 28 August, when he warned that US inflation was not slowing significantly towards the central bank’s 2 per cent target.
Those comments reinforced market expectations that monetary policy could become more restrictive, creating additional pressure on gold prices.
Source: Emirates 24|7