This edition of our Investment Commentary examines gold’s performance year-to-date and explores relevant macroeconomic factors that can influence gold’s performance into Q4 2014.
Gold is up by 9.2% so far this year. This surprised many market participants as most analysts predicted lower prices. Some investors took advantage of last year’s price correction to buy gold but investment demand has remained tepid. We consider that the current environment of high bond issuance, tight credit spreads and record low volatility continues to offer a prime opportunity for investors to add gold. In our view, gold can reduce overall portfolio risk and it is cheaper to implement than many volatility-based strategies.
We view the direction of the US dollar as well as the strength of Asian demand as key indicators of gold sentiment. Further, potentially reduced mine production at lower prices should, in our view, limit the downside. Finally, our research shows that gold should not be looked at in isolation but as part of portfolio and that a small strategic allocation can reduce the long-term level of risk.
We discuss the limitations of the most common arguments and contextualise gold’s price pullbacks. We examine structural shifts that gold market has experienced over the last decade resulting in a robust set of demand factors, very different from that seen during the 1970s.
Featured Report
Gold Market Commentary: Stick, twist or double down?
Investment Commentary: Looking into Q4 2014
This edition of our Investment Commentary examines gold’s performance year-to-date and explores relevant macroeconomic factors that can influence gold’s performance into Q4 2014.
Investment Commentary: First half 2014
Gold is up by 9.2% so far this year. This surprised many market participants as most analysts predicted lower prices. Some investors took advantage of last year’s price correction to buy gold but investment demand has remained tepid. We consider that the current environment of high bond issuance, tight credit spreads and record low volatility continues to offer a prime opportunity for investors to add gold. In our view, gold can reduce overall portfolio risk and it is cheaper to implement than many volatility-based strategies.
Investment Commentary: 2013 review and 2014 outlook
We view the direction of the US dollar as well as the strength of Asian demand as key indicators of gold sentiment. Further, potentially reduced mine production at lower prices should, in our view, limit the downside. Finally, our research shows that gold should not be looked at in isolation but as part of portfolio and that a small strategic allocation can reduce the long-term level of risk.
Investment commentary: first quarter 2013
We discuss the limitations of the most common arguments and contextualise gold’s price pullbacks. We examine structural shifts that gold market has experienced over the last decade resulting in a robust set of demand factors, very different from that seen during the 1970s.