Time to get out of Gold and into Oil?
Gold was also becoming less attractive within the commodity asset class, Mr Greetham added. He said oil was "a much better hedge against geopolitical shocks", particularly when there were tensions in the Middle East.
"The dollar has been strong in recent months as the likelihood of additional Fed QE [quantitative easing] has fallen," the manager said. "Meanwhile, the sovereign debt crisis is hurting the euro and the likes of the Bank of Japan and the Swiss National Bank are implementing policies designed to weaken their currencies."
He concluded: "We do not see a compelling reason to hold 'out-of-benchmark' positions in gold at present. Large retail flows into gold and still bullish survey readings suggest a significant downside risk if others come to the same conclusions."
However, a survey for Thomson Reuters GFMS found that the gold price was expected to rise to $2,000 on surging investments from central banks and buyers of coins and bars.
The consultancy added: "The gold market has been showing increased sensitivity towards inflation fears during early 2012, as it has become ever more attentive to statements, or inferences from statements, of Federal Reserve Board Chairman [Ben] Bernanke.
"What could be seen as significant is that price falls in response to benign inflationary sentiment have been larger than any gains on heightened inflationary fears."
Gold enjoyed a spectacular bull run until last summer, attracting investors worried that paper currencies would lose value as governments printed money in a bid to restart their stalled economies. The fear of economic meltdown during the depths of the eurozone debt crisis prompted many to seek gold as a safe haven, its traditional role in troubled times.
But more recently the euro crisis has eased and signs of recovery have made further QE less likely. The gold price peaked at about $1,900 in August last year, but is currently at about $1,625.
For further info how you can invest in Oil or Gold, please drop me a note.
