Gold Enjoys Strategic Role in Singapore-Based Investor Portfolio

SEATTLE (Scrap Monster): The World Gold Council (WGC) published a new report highlighting the strategic role played by gold in the portfolio of Singapore-based investors.

According to the report, the gold’s performance has historically been linked to the direction of U.S. dollar. In the event of high interest rates and strong dollar, the emerging market economies face the risk of incurring higher borrowing costs. At the same time, a stronger U.S. dollar tends to diminish gold’s appeal as an alternative store of value, thus resulting in a dip in demand.

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The low rate environment in the country has changed the investor sentiments during recent years. The investor appetite for real estate and private market investments has grown significantly over the years. Consequently, allocation to alternatives in portfolios has surged higher from 13% in 2011 to 22% in 2020. Incidentally, the assets managed within the alternatives sector have recorded an average growth by 20% since 2014.

As per the WGC report, gold plays a unique role in portfolios that have large exposure to Asia Pacific (APAC) and Emerging Markets (EM) Asia assets. Having a strategic allocation to gold will help to capture EM Asia’s upside, as income rises. At the same time, it could protect the portfolio against systemic risks and at times of market turmoil.