Gold continues to shine as a hedge against uncertainty

investmentnews.com:

Gold isn’t losing its allure, according to a dozen money managers who all told Bloomberg News they expect to maintain or raise their exposure to the precious metal in the coming 12 months.

Bullion has stumbled in recent weeks in the face of multiple headwinds from surging real yields to a stronger US dollar and the prospect of US rates staying higher for longer. The survey of investors — from sovereign wealth managers to hedge funds — offered some modest optimism for price prospects into 2024.

None of the respondents said they would cut their exposure to gold in the immediate 12 months, and five of them said they expected to boost their allocations. More than two thirds of them see prices rising, and five expect a clear all-time high. The poll was conducted between Aug. 10 and Aug. 22.

There’s still obvious uncertainty around when the Federal Reserve will end the bank’s tightening cycle, which would be an important positive for non-interest bearing gold. Global central banks continue to grapple with stubborn inflation, and the US labor market has remained surprisingly resilient in the face of aggressive monetary tightening. 

While there’s some signs that investors are bracing for rates to stay higher for longer, the swaps market is still pricing in no more rate hikes, and a shift to policy easing next year. 

“We do anticipate there’s pent-up gold demand from investors waiting for the Fed to finish,” said Darwei Kung, head of commodities and portfolio manager at DWS Group. “That’s a positive set-up from our perspective.” He sees gold reaching a record $2,250 an ounce in the time period.

Bullion is currently trading near $1,900 an ounce, down about 8% from this year’s peak. It reached a record in August 2020 at about