Neal Bhai Reports — Holding Gold Gets Scary for this Former Bull — The Federal Reserve is giving some gold investors a case of the jitters. Cohen & Steers Capital Management, which oversees $61 billion in assets, was overweight on gold until last week, when comments from some Fed officials boosted speculation that central bank will tighten monetary policy as soon as this month. With the rate decision due next week, the asset manager opted to play it safe, paring its gold allocation.
The firm isn’t alone. Over the past week, investors pulled $698 million from SPDR Gold Shares, the largest exchange-traded fund backed by the metal, taking their holdings to the low est since June, data compiled by Bloom berg show. Aggre gate open interest in gold futures has dropped for four straight sessions, the longest stretch since May.
“We’ve been over weight gold for most of this year, which has been a good place to be,“ Ben Ross, a portfolio manager at Cohen & Steers, said.“Gold would get hit pretty hard in a rising rate environment. We’re market-weight right now, and the reason is the 10-year Treasury yield is starting to really move and being in gold scares us.“
The gold rally has stumbled after it posted its best first half in almost four decades. While traders are pricing the odds of an increase in borrowing costs next week at about 20%, those chances climb to more than 50% by year end, and some investors are cashing in gains now. — Gold Silver Reports