Gold analysts are the most bearish since June as the US Federal Reserve signaled it may ease stimulus “in coming months” as the economy expands, cooling demand for an investment haven.
Nineteen analysts surveyed by Bloomberg News expect prices to drop in the week ahead, nine are bullish and three neutral, the largest proportion of bears since June 21. Gold has fallen to a four-month low and the US dollar strengthened after Fed minutes released on Wednesday showed US policymakers expected enough improvement in labor markets to warrant slower debt purchases.
Gold is heading for its first annual drop in 13 years as some investors lost faith in gold as a store of value, fueled by concern that reductions in US$85 billion of monthly Fed bond buying will ease the risk of accelerating inflation. US unemployment-benefit applications fell to the lowest in two months and retail sales last month jumped the most since July, the government said this week.
Standard Bank Group Ltd advised selling gold on rallies amid weaker physical demand in Asia.
“For safe-haven assets, there’s no point because the economy is recovering,” said Andrey Kryuchenkov, a commodity strategist in London at VTB Capital, a unit of Russia’s second-largest lender. “The dollar should remain strong, and that’s what should cap any upside in gold anyway. Consumer demand is slowing down. It will recover, but not at the moment.”
Investors sold 773.9 metric tonnes from gold-backed exchange-traded products this year through Wednesday, erasing US$67.5 billion from the value of the funds and pushing holdings to the lowest since April 2010, data compiled by Bloomberg show.
Billionaire hedge-fund manager John Paulson, the largest holder in the SPDR Gold Trust, the world’s biggest ETP, told clients on Wednesday that he would not personally invest more money in his gold fund because it is not clear when inflation will accelerate, according to a person familiar with the matter.