This is actually a big deal and will signal to other firms to do similarly
GFN – LONDON: A Fidelity International portfolio manager has doubled his fund’s gold holdings over the past three weeks, citing rising uncertainty over Federal Reserve policy and weakening confidence in the US dollar’s traditional safe-haven role.
George Efstathopoulos increased bullion exposure to a self-imposed ceiling of 5% after beginning to accumulate gold following the selloff in long-dated US Treasuries that came after the Federal Reserve’s July meeting, Bloomberg reported.
“My translation of that is the lack of Fed credibility and more policy uncertainty,” Efstathopoulos said in an interview Monday.
The move is notable because rising long-term bond yields would normally be considered a headwind for gold, which offers no yield. Efstathopoulos said the more important issue now is why yields are rising, particularly if higher borrowing costs reflect concerns over monetary credibility, fiscal policy or confidence in US assets.
He also questioned the Treasury’s recent decision to expand buybacks of longer-dated debt, saying the policy risks being viewed as an effort to influence yields rather than address the underlying reasons investors are demanding higher returns.
Efstathopoulos said he could raise the fund’s 5% gold ceiling if the dollar continues to lose some of its safe-haven appeal, suggesting policy uncertainty could support further institutional demand for bullion.
