Jupiter has cut its gold weighting by around 2 per cent across the £6.8bn Merlin portfolios as it predicts the gold price will fall.
Gold reached record highs when it hit $1,900 an ounce in Asian trading overnight on August 22 but fell to $1,740 an ounce on August 24. On September 5, it was trading at $1,890.
Jupiter co-head of the Merlin range Algy Smith-Maxwell says: “In August, our gold exposure reached between 9 and 10 per cent across the portfolios. When we were in danger of breaking the 10 per cent limit of exposure to a single sector, it was appropriate to take profits on gold and rotate the proceeds into First State Asia Pacific, which is a low-risk fund in a high beta environment.”
Smith-Maxwell predicts that the gold price will fall further before it rises again, adding: “There is a risk that gold is in the early stages of going parabolic.”
But he says it is still appropriate to hold gold as an insurance policy. He says: “When we get the sense that the Federal Reserve is giving the right prescriptive medicine, we will exit gold.”
Bestinvest senior investment adviser Adrian Lowcock says: “Gold has had a strong run so we have been recommending clients get exposure to gold shares rather than physical gold.”