Gold may scale new highs this year, stay as an attractive asset to buy, hold

In the commodity space, gold is poised to make new highs soon, which makes it an attractive asset to buy and hold onto, according to Juerg Kiener of Swiss Asia Capital. The investment management firm is in 'accumulation mode' when it comes to gold, which means that it is actively buying and holding onto the yellow metal as a long-term investment strategy.

“We are in accumulation mode. The government is accumulating record speeds of precious metal because they want to reduce the counterparty risk and we will see it continue,'' the MD and CIO of Swiss Asia Capital told CNBC-TV18. "Gold is going to make new highs by December 2023 and the market can start finding its own way to higher levels," added Kiener, who has been tracking the commodity space for several years.

Also Read: Gold Prices Today: Yellow metal likely to consolidate in broader range with positive bias

Prices of many commodities, from metals to grains have come off their 2022 highs. Metals have been hounded by doubts over China's pace of growth, while off the post-Ukraine war highs are still close to all-time highs in part due to El Nino fears.

The resultant inflation fears are for all to see, which is more rate hikes expected from the Fed and it can be seen in US bond yield rates. Kiener expressed concern about the counterparty risk associated with holding gold.

To mitigate this risk, the company is looking for ways to reduce its exposure to counterparties when it comes to gold transactions, which is an important consideration for investors who want to protect assets and minimise risk.

US employment and consumer prices reports in the next two weeks would help investors gauge the path of interest rates. Underlying inflation in the euro zone will stay high in the near term, so a 50 basis-point rate increase later this month is increasingly certain, European Central Bank President Christine Lagarde told Reuters.