Economic conditions remain favourable for investors seeking exposure to gold, despite the steep rise in the price of the precious metal this year, according to Nick Peters, multi-asset investor at Fidelity, who has been buying more gold.
Peters said, ‘’Many investors have looked to add to gold on the back of fears over global growth, with worries over a slowdown in China particularly prevalent at the beginning of the year.
The impact of these fears can be seen on the gold price over 2016, with a sharp leg up occurring at the height of market panic in the second half of January. Gold has benefited just as much from an easing in headwinds as any support from jittery investors.
The Fed’s adoption of a more dovish stance at the beginning of the year resulted in an easing of the strong dollar trend, normally a headwind to the gold price. With yields expected to remain lower for longer, the traditional drawback of gold, that it yields nothing, is less of an issue.
However, there are those who believe that gold will only perform in a negative real yield environment – i.e. where inflation is higher than yield levels – and we’re not quite there yet.’
More of the article can be seen here.
Article from What Investment.