Home Capital Broker's Calls

Will taper talk see investors abandon gold?

Ng Qi Siang
Ng Qi Siang 6/7/2021 2:23 PM GMT+08  • 3 min read
Will taper talk see investors abandon gold?
Gold has benefitted from the recent bitcoin dip as markets question crypto's role as a store of value.
Font Resizer
Share to WhatsappShare to FacebookShare to LinkedInMore Share
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

The relationship between gold and investors is like one between a mother and her prodigal son. A dovish Fed and economic uncertainty have seen the investors cling tightly onto “mother bullion’s” apron strings. But amid talk of a Fed tapering, Bank of Singapore (BOS) currency strategist Sim Moh Siong sees investors lured away from gold by more seductive yields elsewhere.

“US real yields could move higher towards year end amid a more positive macro backdrop, which should weigh on gold. History shows that over time, the price of gold closely tracks real US bond yields,” writes Sim in a June 4 broker’s report. He targets gold prices coming in at US$1800/oz ($2383.36) in a year’s time.

Even if a taper tantrum is avoided, Sim sees markets failing to resist the sweet nothings of Fed taper talk. There is a growing risk of a tone shift from voting members of the Fed’s Open Market Committee (FOMC), as more Fed governors clamour to start discussing the timetable for policy exit. The Fed, Sim warns, could start discussing tapering soon.

For more insights on corporate trends...
Sign In or Create an account to access our premium content.
Subscription Entitlements:
Less than $9 per month
Unlimited access to latest and premium articles
3 Simultaneous logins across all devices
Bonus unlimited access to online articles and virtual newspaper on The Edge Malaysia (single login)
×
Loading next article...
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
Subscribe to The Edge Singapore
Get credible investing ideas from our in-depth stock analysis, interviews with key executives, corporate movements coverage and their impact on the market.
© 2022 The Edge Publishing Pte Ltd. All rights reserved.