Global market volatility is seeing fund houses increase their allocations to the safe haven asset class of gold.
Max Belmont, portfolio manager at First Eagle Investments, said in the wake of Trump’s tariffs the firm has increased its gold allocation.
Belmont said an allocation to the precious metal is always a strategic allocation in the portfolios of First Eagle.
“Gold is unique from a safe haven perspective because of its relative stability of supply,” he said.
“Unlike other commodities, think oil, copper, iron ore, it doesn’t get consumed in industry.
“Hence, it doesn’t have the sensitivity to the business cycle that other commodities may experience during high, volatile and uncertain times.”
When it comes to advisers looking at the asset class for their clients, Belmont said it is key to understand the drivers of gold prices over the short, medium and long term.
Gold prices peaked in mid-April at £2,610 per ounce and the price currently hovers around £2,400.
Belmont added: “Effectively, it’s an anchor, if you will, that sometimes we call gold ballast.
“We sail rough and still waters with this ballast of gold that actually steers the ship. The ship, meaning our equity allocation and our diversified portfolios, will still progress and is still participates in the march of mankind.
“But we have something for those potentially rainy days that may come, and that is our gold exposure.”
Retail investors turn to gold
Elsewhere, retail investors have become bullish on gold with 58 per cent telling a survey by Charles Schwab UK they believe it will increase in value over the next year.
This is up five percentage points on the previous year.
With gold prices reaching record highs, research has also found that nearly a quarter of investors have increased their holdings of precious metal stocks in the past three months.
Richard Flynn, managing director at Charles Schwab UK, said: “Amidst a backdrop of heightened geopolitical tensions, market volatility, and fears over levels of inflation, our study shows investors are increasingly bullish towards so-called safe-haven assets such as gold and other precious metals.
“While some investors are opting to invest in gold directly, others prefer to invest in mining stocks to gain exposure to gold within their portfolios.”
The move away from US dollars to gold has been seen around the sector.
In an update, Michael Lok, group chief investment officer of UBP, revealed the Swiss private bank has decreased its exposure to US dollars and increased its allocation to gold.
He said: “Trade tensions have already underpinned growth and reignited inflation expectations.
“After a sustained positive trend, household consumption is slowing, while sentiment is deteriorating.
“Meanwhile, corporates are grappling with a lack of visibility, dampening both investment and reshoring efforts.
“As we adopt a wait-and-see stance during the 90-day pause, we are hedging against potential US dollar weakness by increasing our exposure to gold – a position backed by a strong conviction in the yellow metal.”
tara.o’connor@ft.com
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