Central-bank stimulus programs will help buoy gold prices, said Jeffrey Sica, who helps oversee more than $1 billion in assets as the president at Sica Wealth Management LLC in Morristown, New Jersey.
The Federal Reserve is buying $85 billion of debt a month and has said further improvement in the labor market is needed to consider reducing its record monetary stimulus known as quantitative easing. Payrolls grew by 88,000 in March, the least in nine months, the Labor Department said April 5. Confidence among consumers fell in April to the lowest since July, a private report showed April 12.
Bank of Japan Governor Haruhiko Kuroda reiterated last week a pledge for all necessary steps to meet a goal of 2% inflation in two years. The central bank will boost its monthly bond purchases to 7 trillion yen ($76 billion) to fight deflation and revive the economy, he said April 4.
“I see gold being much more stable,” Sica said. “The Fed will not stop printing money, and the quantitative easing will go on until at least the end of the year. What Japan is doing and what the U.S. is doing will continue to support gold prices in the future.”
The Fed, BOJ and European Central Bank have more than doubled the combined size of their balance sheets since the global financial crisis erupted in 2007.
Gold has ceased to be the haven for investors after it fell when the euro was close to collapse last year, billionaire investor George Soros said in an interview with the South China Morning Post published April 8. Soros cut his stake in the SPDR gold fund by 55% in the fourth quarter, a filing with the Securities & Exchange Commission shows.
Money managers took $1.39 billion from commodity funds in the week ended April 10, said Cameron Brandt, the director of research for Cambridge, Massachusetts-based EPFR Global, which tracks money flows. Outflows from gold and precious-metals funds totaled $1.26 billion, he said.