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Fund firms put gold on hold as price hits new high

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Fund managers and advisers are wary of increasing their holdings in gold with the price at an all-time high.

Last week, the price of gold hit $1,500 per 100 ounces as investor demand for safe inv- estments grew against global economic concerns.

Cazenove multi-manager Robin MacDonald says his firm holds gold through exchange traded funds and is looking to hold its overall position below 5 per cent. He says: “In our diversity multi-manager fund, we hold 2.23 per cent and have no immediate plans to increase this position. Gold has had a fantastic run but it is a crowded trade at the moment. We are bullish on the asset class but unfortunately nothing goes up in a straight line so we are not chasing aggressively.” founder Justin Modray says: “I would stick with gold in the long term but in the next couple of years I think it is probably at the upper echelons for its price, given the run it has had. People tend to flock to commodities such as gold in uncertain times but what has been surprising is that the price has shot up with the market. Tensions in the Middle East or other global uncertainty could occur and another small hike could not be ruled out.”

Whitechurch Securities senior analyst Ben Seager-Scott says: “At the beginning of the 1980s, gold hit the $800 mark and then proceeded to rapidly lose half its value. It remained subdued at this level for the best part of two decades.

“It is important that investors do not think it is safe and that it will not go down. It has no fundamental value as a utility and no value as a long-term investment.”

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