Schroders Turns Bullish on Gold as Debt, Inflation and Currency Risks Eclipse Elevated Real Yields

In late August, Schroders analysts upgraded gold to a positive rating after taking profits in May. The London firm sees an attractive medium-term opportunity despite elevated real yields and the recent price surge. The company highlighted strong structural demand, improved speculative positioning and persistent concerns over inflation, sovereign debt and currency stability. They stated: “A combination of elevated real yields, renewed institutional demand, and cleaner positioning among fast-money investors has prompted us to re-engage with the gold trade; despite the recent rally, we believe that this position may offer an attractive medium-term risk/reward opportunity.” Gold approached 4700 dollars per ounce last month amid US debt worries but retreated to 4381.50 dollars after Federal Reserve Chair Kevin Warsh stressed inflation control. Schroders stays constructive on the economy and equities while also favoring energy and metals. Despite traditional headwinds from rising real yields and a stronger dollar, the asset manager is increasing gold exposure due to central-bank and Chinese demand plus risks to monetary-policy independence.