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Singapore multi-family office remains cautious about trade progress

[MUMBAI] When it comes to gold, apparent progress in trade talks and investors' shifting appetite for risk, it may pay to remember US President Donald Trump's failed flirtation with long-time US adversary North Korea as a reason for caution, according to bullion bull Taurus Wealth Advisors Pte.

The Singapore-based multi-family office, which has US$1.7 billion under management, says while investors are tracking positive signs in US-China negotiations that are spurring equities, the recent history of the US president's engagement with Pyongyang gives reason for a pause.

"I would be cautious on these trade discussions," Rainer Preiss, executive director for client investments at Taurus, told Bloomberg Television. It "reminds me of the discussions about the United States and North Korea. There is a lot of talk, nothing has really happened. Like North Korea, the China dispute is, in my opinion, more of a cold war than just a trade issue."

While gold has rallied in 2019 as growth slowed, the trade war bit and central banks cut rates, investors are now following signs that Washington and Beijing are on the cusp of a phase-one agreement. Last year, Mr Trump held a historic summit with the leader of long-time foe North Korea, Kim Jong Un, but after a burst of rosy headlines that initial meeting failed to pave the way for a meaningful breakthrough. Other unproductive meetings have followed.

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"These are still very strategic and very deep issues between the US and China," according to Mr Preiss, who said there isn't likely to be "any easy resolution". The outlook for gold, however, remains positive as the market prices in even lower interest rates and central bank buy more bullion, he said.

Gold for immediate delivery hit US$1,557.11 an ounce in September, the highest since 2013, and it's up 17 per cent this year. Holdings in exchange-traded funds (ETFs) have swelled to near a record as US rates fell. The price was last at US$1,505.81.

On Tuesday, the World Gold Council reported that total purchases in the third quarter rose about 3 per cent from a year earlier as increased buying for bullion-backed ETFs offset weaker jewelry consumption.

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