Why isn't gold just a safe haven?


According to Joseph Stefans , head of trading at precious metals house MKS PAMP, gold will continue to show strength in the face of rising US interest rates, rising expectations of a soft landing and rising geo risks. politics increases.

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While the Federal Reserve's "higher for longer" narrative is driving prices lower, precious metals remain surprisingly resilient as governments around the world continue to accumulate it amid growing economic and political risks.

"Most assets are affected by the Fed's decision to raise interest rates in the near future and gold is no exception," said Stefans, global head of CME Group, responding to a question from Jin Hennig, about politics. How will US monetary policy impact bullion?

His comments came as part of the OpenMarkets Idea Exchange panel. The interview took place after CME Group's annual precious metals dinner in New York City in September.

Despite the growing specter of higher benchmark rates and a strong US economy, gold prices (which hovered above $1,800 an ounce in early October) have not fallen as much as some predicted and could be driven by nations' desire to hoard gold. It could benefit from concerns surrounding the risks of a prolonged economic and geopolitical downturn such as the Russia-Ukraine war, the Israel-Hamas conflict and fragile US-China relations.

"Gold is a global investment asset. There are very different economic scenarios between countries around the world," Stefans said. "So while it makes sense to cut allocations in the US and North America, the opposite is true in many other countries where adding gold to the portfolio makes sense."

When asked what a soft US landing or recession would mean for gold, Stefans emphasized strong demand could continue to lift prices.

"Gold is more than just a safe haven."

Joseph Stefans, Trading Director, MKS PAMP Group

"Six months ago, we were in a very dark period that we thought the US and other countries were heading towards. Now we predict a much softer landing, which will take away the take some safe haven positions in gold," Stefans commented.

"But gold has become a much safer haven. People buy it for other reasons, such as to diversify into local currencies or offset economic uncertainties in the country or region "So while the soft landing scenario isn't necessarily a bullish catalyst for gold, I don't think it's as bearish as most of the market would have you believe."

American power

Hennig highlighted the stronger-than-expected US economic performance and how that has boosted the dollar while Treasury yields remain high - an attractive cocktail that could weigh on gold prices and other precious metals in the long term.

While agreeing that the dollar will remain high against that backdrop, Stefans noted that Washington's rising fiscal costs risk weakening the country's debt profile, and that makes some governments must accumulate gold instead of treasury bonds.

"Some countries that have been traditional buyers of US debt are now diversifying into other things like gold," Stefans noted, adding that this trend could create a long-term drag against greenback and gold support. 

"When I look at the long term, three to five years or seven and 10 years out, this is something that could be beneficial for gold," Stefans said.

Source: cungcau.vn

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