The decline in precious metals prices last month hasn’t scared away investors with a long-term bullish view on gold exchange traded funds.
Gold ETFs are down more than 10% over the past month.
However, managers of the best-performing commodity funds think gold prices will remain strong as investors seek out safe havens in a slowing economy, Reuters reported Friday.
“Our conclusion of the last month is that gold is not immune in a very negative global commodity and equity market environment, which was similar to the autumn 2008 experience,” said Peter Sigg, head of investment management for commodities at LGT Capital Management, in the report.
Russ Koesterich, iShares global chief investment strategist at BlackRock, said the key fundamental factors driving gold remain in place. He listed negative real interest rates after inflation, currency debasement and the U.S. deficit.
“Looking ahead, the Fed will likely keep interest rates low for some time. Assuming it also uses monetary policy to help keep inflation positive, real rates are likely to remain negative — and support gold prices — for a while,” Koesterich wrote at the iShares blog.
“Gold tends to do best when fiat currencies — paper currencies without any intrinsic value — depreciate. In recent years, many governments, including the United States, have been content to allow their currency to depreciate as a method to stimulate economic growth,” the strategist added.
iShares Gold Trust (NYSEArca: IAU)
