Nobody Is Paying Attention To Gold... For Now - Analysts
BOSTON - (Kitco News) - While there is no clear consensus on where gold is going in the near term, the one thing most participants at the LBMA 2018 precious metals conference can agree on that nobody is paying much attention to the space.
“Gold is almost absent in traditional asset management,” said David Seif, director and economist at Point72, in a panel discussion at the conference Monday.
“Gold has been the forgotten asset,” added David Chang, commodity portfolio manager at Wellington Management. “Fifteen years ago, asset managers appreciated gold’s role as a unique asset.”
Seif said that he doesn’t see a compelling reason to own gold in the current environment. He added that the sell-off in equity markets -- which have had their worst month since the 2008 financial crisis -- has been unjustified. Seif also said that he expects government fiscal stimulus will continue to drive the economy for the next few quarters.
Looking at interest rates, Seif said that he expects to see five more hikes before the Federal Reserve signals it is done.
“There needs to be a compelling story for hedge funds to get interested in gold. In the last few years, that story has largely disappeared,” he said.
However, Seif also said that he doesn’t see gold prices going much lower in the near term. “I’m not sure there is much room for shorts in gold, but I don’t see much upside."
On the more optimistic side, Chang said that he is the most positive on gold in years. He added that he is not as confident about equity markets, and gold should continue to perform well as equities continue to correct.
“Having a position in gold has done a great service to our clients as it has lowered their overall volatility,” he said.
However, Chang added that gold needs to show consistent gains to attract fresh investors to the marketplace.
Although Seif is not enthusiastic about gold through the next year, he added that rising inflation and an end to the current hiking cycle will be positive long-term factors for the yellow metal.
“What gold really needs is for the Fed to signal that it is done raising rates,” he said. “When that happens, that will be a good day for gold.”