Fund managers’ ardour for gold cools as fears recede
Reuters: London, Feb 05 2013, 00:38 IST
be drawing to a close. “There is a greater chance today than there was last year that we might start to see QE being less prevalent,” BlackRock fund manager Evy Hambro said. "But the great concern for the US economy is not to do it too soon.” One of the reasons why QE is considered good for gold is that it stokes fears of inflation. During periods of inflation gold is expected to hold its value while that of other assets is eroded.
Not everyone is convinced. In a note produced last month, which preceded a $40 drop in the gold price, HSBC Asset Allocation said that it preferred treasury inflation-protected securities as an inflation hedge. “If you get inflation, provided you get a monetary response to it (in the form of) higher interest rates, that is the death knell for gold,” JP Morgan's Gregson said.
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