Despite economic uncertainty in some regions, the gold price declined in the first half of 2015. While puzzling to some investors, this is consistent with market expectations that the risks could be contained. We believe that the gold price already reflects a possible rate hike later this year and that the US-centred perspective is missing a more comprehensive view of the market.
This latest edition of our Investment Commentary examines gold’s year-to-date performance and explores the potential tailwinds and headwinds it may face during H2 2015:
- Current market risks seem to be contained to either a sector or a region, but a prolonged environment of low rates has increased risk exposure globally
- Volatility in the US stock market remains relatively tame and, historically, these periods are good opportunities for investors to buy portfolio protection
- While higher US interest rates may put pressure on the gold price, economic growth is not necessarily bad for gold and its strategic role in portfolios.
