‘Ideal hedge’: Gold could hit a new high within two years, investors tell the FT
Fund managers and gold-mining executives expect gold to advance as central bank policies and geopolitical instability support demand
Forecasts presented at an FT conference point to a new all-time high gold price within two years / Photo: Rdeka / Shutterstock.com
Fund managers expect gold prices to rise over the medium to long term, as the Financial Times reports. Demand will be supported by investors seeking safe havens amid geopolitical tensions and market uncertainty. The Fed’s rate hike and growing expectations of further tightening have weighed on gold, pushing it below its peaks, but some investors expect a sharp rebound. Below are the forecasts they shared at the FT’s Precious Metals Symposium.
Charlotte Yonge, a fund manager at Troy Asset Management, expects gold to reach a new record within 12-18 months. She described the yellow metal as the ideal “hedge” against the worsening “state of government finances,” pointing to ballooning U.S. government debt and expectations that central banks would print more money “next time we go into a recession.” “Gold can’t be printed in that same way,” she pointed out.
Paul Carne, delegated chief investment officer for Europe, the Middle East, and Africa at Aon Investments, predicts a new all-time high within two years, citing U.S. policy-making. “When you weaponize the dollar... don’t be surprised when people stop using it. What are you going to use instead?” he argued.
Investors should be asking whether “we are on the front end of a financial crisis,” warned Peter Marrone, chair and CEO of miner Allied Gold. He said billionaires’ family offices were increasingly shifting from government bonds into gold as the macroeconomic backdrop deteriorated.
Ian Cockerill, CEO of gold producer Endeavour Mining, highlighted support for gold prices from the macroeconomic environment and declining faith in fiat currencies. “That is very strong underpinning in the price of gold,” he said. “Is $4,000 the floor? I don’t know. But if it isn’t, it’s pretty damn close for the next leg up in the gold price.”
Central banks ramping up purchases
Central bank demand for gold remains “very strong,” said Suki Cooper, global head of commodities research at Standard Chartered, even though some countries sold the yellow metal this year to raise funds after the outbreak of the U.S.-Israeli war with Iran. Their purchases reached the highest monthly level in almost two years in September, totaling around 63 tons, according to World Gold Council calculations.
Industry executives think reserve purchases will accelerate as emerging markets lose confidence in the dollar and seek an alternative reserve currency. Gold is more likely to fill that role than the euro or the yen, according to Troy Asset Management’s Yonge.
The People’s Bank of China has continued buying gold in recent months. Gold now accounts for 9% of the central bank’s total reserves.
