Investment analysts maintained negative views over gold holdings after the precious metal lost 28 percent in value last year, and its popularity continues to decline among Taiwanese investors.
“Gold is not a good investment choice this year as its prices may move sideways for quite a while after contracting 28 percent last year,” Spencer Wang (王進彰), vice president of Citicorp Securities Investment Consulting Inc (花旗投顧) told a media briefing.
The US firm expects gold prices to hover at about US$1,100 an ounce this year, Wang said, compared with US$1,242.66 an ounce in the US spot market and US$1245.40 for gold futures for delivery in February.
Most investors have some asset allocation to precious metals in their portfolios, most often gold, to protect them against the proliferation of paper money printed by the world’s largest central banks.
The need for insurance is retreating after economies in the US and other developed nations remained on track for recovery, paving way for the ultimate exit of the US Federal Reserve’s quantitative easing and increases in investors’ appetite for equities holdings, Wang said.
Gold used to be ranked as the second-best investment tool among Taiwanese, bettered only by real-estate assets, but has slid to third or fourth-place since the second half of last year after the Fed signified its plans to taper off its debt purchases, according to different surveys.
Local investors have shifted part of their money to assorted funds and insurance policies as gold prices flounder.
Jordan Chen (陳朝燈), chief investment officer at Schroder Taiwan — the local unit of the British financial service provider — said last month that buying gold for risk-hedging purposes is a risk itself.
He was also downbeat about the outlook for gold, saying it had seen a 12-year positive cycle prior to the correction last year and has probably not hit bottom yet.