Fidelity says US$4,000 gold possible as Fed cuts rates, US dollar drops
Multi-asset fund manager Ian Samson said the firm remained bullish on the precious metal, with some cross-asset portfolios recently increasing holdings as prices eased from an all-time high above US$3,500 an ounce in April.
'The rationale for that was that we saw a clearer path to a more dovish Federal Reserve,' Samson said, adding that some funds had as much as doubled their 5 per cent allocation over the past year. Also, August is often slightly weaker for markets, so more diversification 'makes sense', he added.
Gold is up by more than a quarter this year, as uncertainty around US President Donald Trump's aggressive attempts to reshape global trade, conflicts in the Middle East and Ukraine, and accumulation by central banks buttressed gains. Still, the metal has traded within a tight range over the past few months, with demand for havens cooling a little as some progress in US trade talks eased fears about worst-case scenarios for the global economy.
'Perhaps you're going to avoid the doomsday scenarios that were painted earlier in the year, but ultimately we're heading to a 15 per cent or so tax on about 11 per cent of the US economy – which is imports,' said Samson, referring to Trump's tariffs. 'You'd expect it to slow the economy.'
Bullish outlook
Fidelity's bullish outlook for gold is similar to that from Goldman Sachs Group, which has made the case in recent quarters for an eventual rally to as much as US$4,000 an ounce. Still, others are cautious, including Citigroup, which forecasts weaker prices. Spot bullion was last near US$3,315.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
Fed officials are due to gather this week to set policy. While no change is expected, chair Jerome Powell may face dissents from officials who want to provide support to a slowing labour market, potentially from governor Christopher Waller and vice-chair for supervision Michelle Bowman.
A US slowdown would likely see the dovish camp gain more influence in guiding policy, with the US dollar tending to soften in environments of weaker growth, Samson said. In addition, Powell – whose term as Fed chair ends next May – will probably be replaced by someone 'more amenable' to lower borrowing costs as Trump continues to lobby for interest rate cuts, he said.
Non-yielding bullion typically benefits when the greenback softens and interest rates ease.
Elsewhere in the world, central banks are likely to go on buying gold, he added, while growing fiscal deficits – particularly in the US – will continue to reinforce the precious metal's appeal as a hard asset.
'Sure, gold has come a long way, but if you look at when gold's been in a bull market – like 2001 to 2011 – it annualised 20 per cent per annum,' he said. 'From 2021 to today, it's also annualising 20 per cent a year. So it's not necessarily, in the context of a bull run, massively overstretched.' BLOOMBERG
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
32 minutes ago
- Straits Times
Tesla ordered by Florida jury to pay over $400m in Autopilot crash
Sign up now: Get ST's newsletters delivered to your inbox A Tesla car passing the US Courthouse in Miami, Florida, where the case is being heard. MIAMI - A Florida jury on Aug 1 found Tesla liable in the 2019 fatal crash of an Autopilot-equipped Model S, and ordered Elon Musk's automaker to pay US$329 million (S$424 million) to the family of a deceased woman and an injured survivor. The payout includes US$129 million of compensatory damages and US$200 million of punitive damages. Tesla was sued by the estate of Naibel Benavides Leon, and by her former boyfriend Dillon Angulo. The lawsuit concerned an April 25, 2019 incident where George McGee drove his 2019 Model S at about 100kmh through an intersection into the victims' parked Chevrolet Tahoe as they were standing beside it on a shoulder. 'Tesla designed Autopilot only for controlled access highways yet deliberately chose not to restrict drivers from using it elsewhere,' Mr Brett Schreiber, a lawyer for the plaintiffs, said in a statement. 'Today's verdict represents justice for Naibel's tragic death and Dillon's lifelong injuries.' Tesla did not immediately respond to requests for comment. REUTERS
Straits Times
2 hours ago
- Straits Times
US, NATO developing novel funding mechanism for Ukraine weapons transfers
FILE PHOTO: Ukrainian service members walk next to a launcher of a Patriot air defence system, amid Russia's attack on Ukraine, in an undisclosed location, Ukraine August 4, 2024. REUTERS/Valentyn Ogirenko/File Photo WASHINGTON - The United States and NATO are working on a novel approach to supply Ukraine with weapons using funds from NATO countries to pay for the purchase or transfer of U.S. arms, according to three sources familiar with the matter. The renewed transatlantic cooperation on Ukraine comes as U.S. President Donald Trump has expressed frustration with Moscow's ongoing attacks on its neighbor. Trump, who initially took a more conciliatory tone toward Russia as he tried to end the more than three-year war in Ukraine, has threatened to start imposing tariffs and other measures if Moscow shows no progress toward ending the conflict by August 8. The president said last month the U.S. would supply weapons to Ukraine, paid for by European allies, but did not indicate how this would be done. NATO countries, Ukraine, and the United States are developing a new mechanism that will focus on getting U.S. weapons to Ukraine from the Priority Ukraine Requirements List, known under the acronym PURL, the sources said. Ukraine would prioritize the weapons it needs in tranches of roughly $500 million, and NATO allies - coordinated by NATO Secretary General Mark Rutte - would then negotiate among themselves who would donate or pay for items on the list. Through this approach, NATO allies hope to provide $10 billion in arms for Ukraine, said a European official, speaking on condition of anonymity. It was unclear over what timeframe they hope to supply the arms. "That is the starting point, and it's an ambitious target that we're working towards. We're currently on that trajectory. We support the ambition. We need that sort of volume," the European official said. Top stories Swipe. Select. Stay informed. Tech Reporting suspected advanced cyber attacks will provide a defence framework: Shanmugam Business Singapore's US tariff rate stays at 10%, but the Republic is not out of the woods yet Asia Asia-Pacific economies welcome new US tariff rates, but concerns over extent of full impact remain Business ST explains: How Trump tariffs could affect Singapore SMEs, jobs and markets Asia Indonesia's Mount Lewotobi Laki-laki erupts Singapore Thundery showers expected on most days in first half of August Singapore Synapxe chief executive, MND deputy secretary to become new perm secs on Sept 1 Singapore 5 women face capital charges after they were allegedly found with nearly 27kg of cocaine in S'pore NATO declined to comment. The White House, Pentagon, and Ukrainian embassy in Washington did not respond to requests for comment. Russian forces are gradually advancing against Ukraine, and control one-fifth of Ukraine's territory. FASTER ARMS RESTOCKING If a NATO country decides to donate weapons to Ukraine, the mechanism would allow that country to effectively bypass lengthy U.S. arms sales procedures to replenish its own stocks, said one U.S. official, speaking on condition of anonymity. But the NATO country would have to pay the U.S. up front for the speedier replenishment. The money would be paid into a U.S.-held account, possibly at the U.S. Treasury Department, or to an escrow fund, although the exact structure remains unclear, the official said. NATO countries also have the option of simply paying the United States to send weapons directly to Ukraine. In that case, the payment could be made via NATO or directly to the U.S. Department of Defense, said a second source, speaking on condition of anonymity. This would be in addition to the United States' own effort to identify arms from U.S. stockpiles to send to Ukraine under the Presidential Drawdown Authority, which allows the U.S. president to draw from current weapons stocks to help allies in an emergency. At least one tranche of weapons for Ukraine is currently being negotiated under the new mechanism, two sources said, though it was unclear if any money has yet been transferred. Trump's fellow Republicans in Congress have introduced legislation, known as the PEACE Act, that aims to create a fund at the U.S. Treasury in which allies can deposit money that would pay to replenish U.S. military equipment donated to Ukraine. Ukraine's needs remain consistent with previous months - air defenses, interceptors, systems, rockets, and artillery. The last statement of need from Ukraine came at the July 21 Ramstein conference led by EU allies, including Britain. REUTERS
Straits Times
2 hours ago
- Straits Times
UOB to trim deposit rates on flagship account from Sept 1 after OCBC cut; DBS stays unchanged
Sign up now: Get ST's newsletters delivered to your inbox A flagship savings account is a bank's best savings product, which offers bonus interest rates that go up as customers transact more with the bank. SINGAPORE – Interest rates keep falling for savings accounts here with UOB now about to fire the next salvo. The lender said it is cutting rates for its flagship UOB One account from Sept 1 – the third such reduction in the past two years. UOB's move follows on the heels of OCBC, which dropped rates on its 360 account from Aug 1 – the second time this year. DBS remains the last one standing, with rates on the Multiplier account remaining unchanged at between 1.8 per cent and 4.1 per cent. A flagship account is a bank's best savings product, offering bonus interest rates that rise as customers make more transactions, such as credit their salary, spend on their credit card, take up a loan or buy an insurance policy. UOB told customers that it is dropping the bonus rates for two categories by between 0.5 and 0.8 percentage point. The affected categories are: Card spend and the requirement to make three debit transactions via Giro; and card spend and salary credit. UOB One customers will earn between 1 per cent and 3 per cent on their first $125,000 from Sept 1, if they fulfil the criteria for the two categories. The rates are down from between 1.5 per cent and 3.8 per cent. Top stories Swipe. Select. Stay informed. Tech Reporting suspected advanced cyber attacks will provide a defence framework: Shanmugam Business Singapore's US tariff rate stays at 10%, but the Republic is not out of the woods yet Asia Asia-Pacific economies welcome new US tariff rates, but concerns over extent of full impact remain Business ST explains: How Trump tariffs could affect Singapore SMEs, jobs and markets Asia Indonesia's Mount Lewotobi Laki-laki erupts Singapore Thundery showers expected on most days in first half of August Singapore Synapxe chief executive, MND deputy secretary to become new perm secs on Sept 1 Singapore 5 women face capital charges after they were allegedly found with nearly 27kg of cocaine in S'pore The rates for the card spend tier remain at 0.05 per cent to 0.65 per cent. This essentially means that customers can expect between $750 and $1,750 of interest a year if they fulfil the criteria of card spend and three Giro debit transactions. If they credit their salary and spend on their UOB credit card, they can expect between $1,125 and $2,625 a year and between $487.50 and $512.50 if they only use their credit card. The upcoming revision is the third time the bank has trimmed rates for the UOB One account since May 2024. A UOB spokesperson said the revisions align with the longer-term interest rate outlook. The announcement follows the July 30 decision from the US Federal Reserve to keep rates steady there at 4.25 per cent to 4.5 per cent . The spokesperson added that the number of customers who earned bonus interest on their UOB One account has increased by more than 10 per cent year on year as at June 30. Mr Michael Makdad, senior equity analyst at investment research firm Morningstar, said UOB had been the more aggressive in offering higher rates among the three local banks in order to attract deposits. He added that he is not surprised that it is cutting rates again as it seeks to 'normalise its offerings that may have been more attractive than (its) peers for some customers'. Mr Glenn Thum, research manager at Phillip Securities Research, said that UOB may be trying to sustain its net interest margin (NIM) by lowering its funding costs. NIM is the difference between the interest income a bank receives from lending and what interest it pays on customer deposits. A higher NIM means more profit, a lower one indicates it is earning less from its lending and deposit activities. Meanwhile, OCBC 360 customers are now earning lower rates after the bank trimmed the interest it pays on certain bonus categories, such as salary credit, savings and card spend, from Aug 1. The bonus rates for the insurance and investment tiers remain unchanged. This marks the second time OCBC has dropped deposit rates on its 360 account, the first coming on May 1, 2025 . Morningstar's Mr Makdad said OCBC has the buffer to follow up with another cut after its results on Aug 1 showed that deposits in current and savings accounts increased 14 per cent year on year to $203 billion as at June 30. Such deposits are seen as cheaper sources of funding for banks. However, Phillip Securities' Mr Thum does not think OCBC will lower rates on the 360 account in the next few months unless the US Fed cuts rates faster than expected. An OCBC spokesperson said its 360 account remains a competitive product. The spokesperson added that the bank 'regularly reviews its product offerings and interest rates to align them with the competitive landscape and market conditions'. Ms Helen Tran, DBS' head of consumer deposits and transactional payments, said the bank has maintained its rates, an approach that has yielded positive outcomes. The number of DBS Multiplier customers increased by more than 30 per cent from March 2022 to March 2025, she noted, adding that 'growth momentum remains strong'. Ms Tran said that the DBS Multiplier remains the only savings account that recognises retirement payouts from the Central Provident Fund account as part of income in the 'Bank & Earn' space. The initiative means that 900,000 Singaporean or permanent resident customers aged 65 and above automatically qualify for higher interest rates on their Multiplier balances. The flurry of deposit rate cuts has left some depositors, like 57-year old civil engineer Leong Meng Sun, scurrying for another bank. Mr Leong was with Standard Chartered initially but switched after the interest on his account dropped from $20 a month in December 2024 to less than $9 from January 2025, for the same salary. He looked at the OCBC 360 but felt he would struggle to meet the requirement to increase his monthly account balances by $500. He then settled on the DBS Multiplier because it pays 1.8 per cent for smaller account balances of $50,000 like his, given he can meet the salary credit and credit card spend criteria. He also likes that Multiplier customers can continue to earn interest after they retire, but acknowledges that DBS may also follow UOB and OCBC to cut the deposit rates: 'It is a risk I have to take.'
