Bet on Asian currencies and stick with gold to win: expert

The Straits Times/Asia News Network

Gold is the way to go, according to an expert on foreign exchange investments. Investors who are already holding gold should maintain their positions, but those who are not should wait for a pullback in prices before entering the market, advises Davis Hall, Credit Agricole’s head of foreign exchange. He also recommends that investors bet on the euro to fall and on Asian currencies to rise. In an interview with The Straits Times in Singapore, Hall said gold prices have skyrocketed as the commodity has become the default safe haven for investors amid weakness in the United States dollar and the euro.

And prices are likely to continue shooting up, he said.

This is because the demand for gold among jewelry and electronics manufacturers is rising along with the purchasing power of Asian consumers, but the supply of gold is limited and the precious metal is becoming more and more expensive for miners to find. However, Hall said the gold price has risen so much that he “wouldn’t buy more at current levels.” “If gold were to come back down to lower levels of between US$1,310 and US$1,260 per ounce, we would be buyers. But we would not like to see gold move below US$1,250 and if it does, we would be very careful to cut our positions.” Investors interested in forex, meanwhile, would do well to buy Asian currencies in anticipation of their rise, Hall said. “The Asian currency revaluation is gaining momentum, with China having to let the yuan appreciate to slow down the potential risk of overheating,” he said. Although political tensions remain a risk in the Korean peninsula, the South Korean won is one of Credit Agricole’s favorites, and the bank expects it to rise by 5 to 6 percent over the next 12 months. The Singapore dollar is likely to rise about 3percent to as high as 1.26 to the U.S. dollar by the end of next year, while the Malaysian ringgit and Indonesian rupiah are forecast to appreciate by about 5 percent, he said.