The end of a golden era?

[SINGAPORE] Gold may have lost its raison d'etre in investment portfolios with the tapering of US monetary stimulus or quantitative easing (QE) now firmly in place and inflation still a faraway prospect.

"Now that the QE timeline has finally been addressed and the FOMC's (Federal Open Market Committee) inflation forecast going out to 2016 looks relatively benign, there's no real reason to hold gold as an inflation hedge in the context of a rising dollar and rising yields," said Mark Keenan, head of commodities research in Asia at Societe Generale.

The Federal Reserve's policymakers are now projecting that inflation next year will be lower than expected. The Fed is projecting inflation at 1.4-1.6 per cent next year, down from the previous projection of 1.5-1.7 per cent; 1.5-2 per cent for 2015; and 1.7-2 per cent for 2016. The US central bank has an inflation target of 2 per cent.