news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

Michael Hartnett, chief investment strategist at Bank of America, recommends that investors buy gold even as prices hover near record highs.

Hartnett wrote in his latest report:Investors should do “what the central banks are doing” – buy gold.

The strategist explained that this is because the Federal Reserve's interest rate cuts in the coming months could trigger a rebound in inflation next year, and physical assets such as gold have historically performed well during periods of inflation.

Just after Hannett made this point, Federal Reserve Chairman Powell clearly released a dovish signal on Friday: inflation is only half a percentage point higher than the Fed's 2% target, unemployment is also rising, and "the time for policy adjustment has come." This remark consolidated expectations that the Fed will cut interest rates for the first time at its September 17-18 meeting.

The move comes as precious metals are enjoying a record rally. Gold has surged about 20% so far this year, outperforming the S&P 500's 18.8% gain and outperforming technology stocks.

Hannett emphasized thatGold was the only asset to outperform U.S. tech stocks.

The report pointed out that one confusing factor behind the rise in gold prices is that investors have not been chasing gold. Instead, the gold market has seen a net outflow of $2.5 billion, which means that investors are taking profits as gold prices rise to a record high.

At the same time, this also means that buying of gold is coming from another group in the market.

Hannetqiang said that the coexistence of record high gold prices and negative capital outflows "can only be explained by the unprecedented purchases by the central bank."

“Gold is now the second-largest reserve asset (16.1% vs. 15.6% for the euro) and has one of the lowest correlations with equities of all asset classes,” the report reads.

Finally, according to the above report,Potential gold ETFs worth considering include iShares Gold Trust Micro (IAUM) and SPDR Gold MiniShares Trust (GLDM), which Hartnett calls "top-tier."