“It’s odd why pension funds would want to buy gold,” said Mark Dowding, chief investment officer at BlueBay Asset Management. “It delivers no income or dividends and it costs money to store. It also does nothing to match assets to liabilities.”
The allure may be that gold simply tends to do well during times of inflation or when equities stumble -- two scenarios that seem within the realm of possibility in the current environment. Spot prices have risen 29% this year and traded at about $1,955 an ounce on Wednesday.

A broader base interested in gold could also mean that if gold does suffer a correction, it’s likely to find plenty of investors waiting in the wings to buy.

“The lower real yields go and the weaker the dollar, the more attractive gold is,” said Charles Diebel, a portfolio manager at Mediolanum International Funds.

“Normal buyers of gold wouldn’t be driving this,” he said, referring to retail investors and jewelry buyers. “It would be long-term investors looking for diversification.”

This article was provided by Bloomberg News.

First « 1 2 » Next