‘Receding recession risks’ lower need to shift into the precious metal
Receding fears of a U.S. slowdown, surging bond yields and the robust performance of equities have gradually eroded the appeal of exchange-traded funds backed by traditional safe-haven gold this year, despite sticky inflation.
Recent U.S. economic data has created uncertainty about further rate hikes from the U.S. Federal Reserve and raised some hope for a “soft landing” for the U.S. economy. Equities have outperformed gold despite higher interest rates, while rival safe-haven Treasury bonds have attracted investors away from gold, which doesn’t earn any interest or dividends.
However, “while some investors have come out of the ETF space, there’s still a positive view of gold as an asset diversifier,” said Philip Newman, managing director of Metals Focus.
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