The price of both gold and silver rose last week despite a spike in US bond yields and a stronger dollar, spurring on speculation that any tapering measures have largely been discounted into their prices.
Since bullion’s July low its price has now risen by 14 per cent, while silver, enjoying a 1.1 per cent gain last week, is now up by 27 per cent over the past eight weeks.
ETF Securities head of research and investment strategy Nicholas Brooks says: “While the surge in US bond yields is pressuring many financial assets, precious metals took the latest release of the Fed’s FOMC minutes in stride, ignoring the Fed’s statement that it is ’broadly comfortable’ with moving ahead with reductions in bond buying in the near future.
“The fact that both gold and silver prices ended the week higher indicates that the start of Fed tapering may have already been largely been priced in to precious metals prices.”
The recent rebound in precious metals prices appears to have triggered some profit-taking, with £50m flowing out of precious metals exchange traded products last week. However physical buyers, especially in Asia, are taking up the slack, says Brooks.
Hargreaves Lansdown senior investment manager Adrian Lowcock says: ”Gold has a place in portfolios as it can provide an insurance policy and will protect investors over the long term effects of quantitative easing. But investors should be wary of short term performance as the gold price can be sensitive to political decisions.”