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While macroeconomic risks linger, the environment is constructive for both gold and risk assets, said Rob Haworth, senior investment strategist, U.S. Bank Wealth Management.
“What we’re seeing in recent times is real yields are finally starting to rise…which is pressuring gold as well, so it’s been time for a correction and we’re getting that now,” Haworth told Kitco News. “I do think that gold prices in particular would be further supported by continued growth in the Fed balance sheet.”
An economic recovery is taking place, but downside risks remain, Haworth noted.
“The challenge for us is the high frequency data has flattened out a bit, so if we look at travelling, whether it’s the TSA data, we look at open tables, who’s dining in restaurants, the improvements are starting to flatten out. So we’re not, in my opinion, back to pre-COVID levels of activity overall,” he said.
Haworth maintains a bullish stance on equities. His portfolio is balanced between stocks and bonds, and this balanced approach is attributed to several lingering unknowns in the market that are being tracked.
“I think the challenge for us is really that there’s a two-sided scenario as we look forward, and there’s an awful lot of risks to get through. One, we don’t yet have fiscal stimulus this side of the pond. Two, we need to get through the back to school season,” he said.
Haworth added that the elections present a major uncertainty to the markets.
U.S. Bank Wealth Management has been paying more attention to gold in recent times, and hold the yellow metal as a hedge against their equities positions.
“Gold’s getting attractive at this point, especially with the equities decline. The primary purpose of it is to provide some downside protection relative to our equities positions,” he said.
By David Lin
For Kitco News
