Gold attractive as macro risks linger, says ETF Securities
Nitesh Shah, associate director Research at ETF Securities, has written in a new note that uncertainty about the strength of the cyclical recovery is one of the key reasons gold is set to rebound from its recent low price.
Despite gains by stock markets globally in recent months, the uncertainties unleashed by the Italian election results and possible failure find a deal to halt federal budget sequestration in the US illustrate just what level of challenges could yet derail the improved confidence in the markets.
The price of gold has slipped significantly since last year, which increases the likelihood that investors will see it as a worthwhile investment, the note suggests.
“Investors are likely to find increasing value in gold as a hedge against downside scenarios given that its price is now 16% below its peak reached in 2011,” Shah wrote.
Meanwhile, continued buying by central banks points to a “floor” that supports the price going forward.
To read the full note click here: [asset_library_tag 6383,Gold]