Hedge funds and other money managers are increasing their bets on gold, with 83% of the largest investors being long on the asset class, according to a new Citi analysis. Gold futures recently settled at a record high above $2,400 an ounce, marking its third straight week of gains. The precious metal is being seen as an inflation hedge due to its limited supply, and investors are turning to it as geopolitical risks rise and inflation reaccelerates. This trend has been fueled by a combination of safe-haven and hedge fund purchases, prompting heavy momentum buying in the market.
Professional speculators’ net-long positions in gold futures and options are near the highest level since 2020, indicating a growing bullish sentiment among investors. Hedge fund Livermore Partners has increased its weighting in gold to over 20%, including gold miner stocks and physical gold. Founder David Neuhauser cited inflation being well above trend and sticky as a reason for the increased interest in gold. He believes that gold will continue to attract investors worried about monetary disorder and debasement, projecting the bullion to reach $3,000 over the next few years. David Einhorn of Greenlight Capital has also made gold a significant position in his portfolio as a defense play against potential market downturns.
Deutsche Bank recently raised its gold price forecast, now expecting the precious metal to reach $2,400 an ounce by the end of the year and $2,600 by the end of 2025. The bank attributed this updated projection to the recent investment inflow that has had a lasting impact on prices. Gold’s popularity among investors as an inflation hedge and safe-haven asset is driving this bullish outlook, as concerns about loose monetary and fiscal policies continue to loom. Einhorn, who holds positions in both the SPDR Gold Trust fund and physical gold bars, views gold as a way to hedge against risks associated with the current economic policies.
Overall, the consensus among major money managers is to overweight precious metals, with gold emerging as a favored commodity. The asset class has been a standout performer in the market, reaching new highs and garnering increased attention from hedge funds and investors. The combination of record-high equities and persistent inflation concerns has fueled momentum buying in gold, pushing prices upward. With geopolitical risks on the rise and inflation reaccelerating, gold’s appeal as a safe-haven asset and inflation hedge has strengthened, driving investor interest and driving up prices in the market.
Gold’s recent performance and investor sentiment indicate a strong belief in its potential as a lucrative investment in the current economic climate. The metal’s allure as a safe haven and inflation hedge has attracted widespread attention and support from major money managers and hedge funds. With bullish forecasts and increased allocations to gold by prominent investors, the precious metal appears poised for continued growth in the near term. As concerns about monetary disorder and fiscal policy uncertainties persist, gold’s status as a reliable store of value and investment asset may continue to drive its popularity among investors looking to hedge against potential economic risks and market downturns.
