Goldman Says Case for Diversifying into Gold ‘as Strong as Ever’
Hedge funds and other large speculators boosted their bullish bets on the precious metal by 8.9% in the week ended Dec. 3.
(Bloomberg) -- Goldman Sachs Group Inc. said investors should diversify their long-term bond holdings with gold, citing “fear-driven demand” for the precious metal.
“Gold cannot fully replace government bonds in a portfolio, but the case to reallocate a portion of normal bond exposure to gold is as strong as ever,” Goldman analysts including Sabine Schels said in a note Friday. “We still see upside in gold as late cycle concerns and heightened political uncertainty will likely support investment demand” for bullion as a defensive asset.
The precious metal climbed to a six-year high in September as the Federal Reserve cut borrowing costs and the total pile of debt yielding less than zero climbed to a record $17 trillion, boosting the appeal of non-interest bearing gold.
Hedge funds and other large speculators boosted their bullish bets on the precious metal by 8.9% in the week ended Dec. 3, government data showed Friday. That’s the biggest gain since late September.
Gold has fallen more than 6% from the peak to close at $1,460.17 in the spot market Friday.
While Goldman said the correction on bullion prices has further room to run, the bank is still sticking to its forecast prices will climb to $1,600 over the next year.
--With assistance from Marvin G. Perez.
To contact the reporter on this story: Yvonne Yue Li in New York at yli1490@bloomberg.net
To contact the editors responsible for this story: Luzi Ann Javier at ljavier@bloomberg.net, Joe Richter
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