Gold Investors Bet Against Fed as War Threatens Paradigm Shift
- Gains in real rates and dollar have made bullion overvalued
- Safe-haven demand should fade, Julius Baer’s Menke says
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Gold is proving remarkably resilient, gaining almost 7% this year as investors shrug off surging real yields and strengthening dollar to focus on political and economic risks.
While traditional yield and currency drivers suggest bullion is overvalued, demand for the haven asset remains strong. That’s because gold buyers piling into exchange-traded funds are taking a pessimistic view of the U.S. Federal Reserve’s ability to cool decades-high inflation without hurting the economy. For them, gold is a hedge against soaring prices and low growth.