Key factors such as uncertainties surrounding the pandemic coupled with the impact on the pace of the recovery in global economy would also support gold prices moving forward.Īs such, dealers estimate gold prices to maintain the level around the current price for the next one year.įor next year, Phillip Futures Sdn Bhd dealers Ting Mee Yi and Ong Su Ling foresee gold prices to hover between US$1,800 (RM7,527) to US$1,815 (RM7,589) per ounce.
Should inflationary pressures persist longer, Dass says investors would be seeking for inflation hedges, adding that gold still has the intrinsic value touted to be the best hedge against inflation in times of stress.Īs such, he forecasts gold prices to hover around the US$1,800 (RM7,527) per ounce level over the next six months, still higher than the pre-pandemic level. With inflation surging to its highest annual pace in three decades last month, gold prices climbed near their highest level in five months early this week. That said, gold is still pursued by some as a hedging asset. “Stocks have produced the highest inflation-adjusted return of any major asset class over the long term,” points out Dass. “Official action might easily limit the use of the digital asset if it grows big enough,” he cautions.Īpart from cryptocurrencies, carefully selected stocks can also help investors protect themselves against long-term inflation. However, Dass stresses that the drawback of investing in bitcoin is that its decline tends to be three-times bigger and the risk can be equalised by holding three times as much gold as bitcoin. “This implies that the digital currency benefits directly from the ‘reflation trade’ – or the belief that inflation is coming,” he tells StarBizWeek. Bitcoin’s performance over the last year is directly aligned to the movement in bond yields. “Even institutional investors appear to be making a decision to allocate some money to bitcoin as a hedge against a fiat collapse. With the tide turning with many younger investors opting for digital assets over metals, Dass says circumstantial evidence reveals that some money has flowed directly from gold into bitcoin.
Interestingly, stocks and even cryptocurrencies such as bitcoin are now better positioned to hedge against long-term inflation for investors, notes Anthony Dass, (pic below)who is the chief economist of AmBank Group. But the bullion appears to be less in favour due to an increased risk appetite fuelled by fiscal stimulus programmes worldwide. The price of gold tends to rise with an increase in the cost of living.Īnd gold has been touted to deliver higher-than-inflation returns over the longer term compared with other asset classes. It is important to note that investors have traditionally seen gold as an excellent hedge against inflation and other uncertainties over the last five decades. Two key factors driving the volatility of gold prices is the recovery of the global economy from the fallout of Covid-19, as well as a surge in treasury yields. Prices of the yellow metal have been volatile this year. DESPITE rising inflation stemming from pandemic-related disruptions, gold has not gotten a shot in the arm this year, with investors eyeing moves into other asset classes.