Catherine Doyle, investment specialist at London-based Newton Investment Management, said that after a unimpressive six months, gold is gaining interest again as a number of factors match its favor. Gold prices are up 12% this year and are currently trading at $2049 per troy ounce on the New York spot market. However, the precious metal is flat in 2022 despite inflation in the double digits. @GC.1 1-Year Line For Doyle, gold’s outlook has improved due to its close relationship with real interest rates. The price of gold usually rises if the market expects low interest rates in a high inflation environment. “It looks like the interest rate path will be shallower than previously anticipated because economies are too fragile to bear high interest rates in the long run,” Doyle told CNBC’s “Squawk Box Europe” on Friday. “. Interest rate traders have priced in a 75% chance of a rate cut by the US Federal Reserve on November 1 of this year, according to the CME FedWatch Tool. This is despite the Fed’s forecast that inflation will remain above the 2% target at 3.6% this year. Doyle also mentioned that gold’s performance could benefit from increased purchases by sovereign wealth funds, especially in emerging markets like China. According to investment bank UBS, central banks, considered the “official” buyers of the transaction, are also major buyers of gold in 2022, accounting for 23% of total demand. It marked the thirteenth consecutive year of net buying and the highest annual demand level on record since 1950. “We also see formal sector demand remaining strong for at least another year, with selective central banks are determined to diversify their reserves away from US dollars and US government bonds. Historically, central bank purchases tend to be less sensitive to prices,” UBS precious metals strategists led by Wayne Gordon said in a note to clients on April 4. UBS’s Gordon agrees with Doyle’s view, as spot gold recently surpassed $2,000 an ounce in the wake of the banking crisis in March. The strategist expects gold prices to reach $2,200 an ounce in the next 12 months. How to Trade Gold Doyle’s preferred method for exposure to gold is through exchange-traded commodities (ETCs), backed by physical gold. Unlike exchange-traded funds that invest in multiple stocks, ETCs allow investors to focus on a single commodity. An ETC is structured as a note, which is a bank-guaranteed debt instrument to an issuer and backed by a commodity they track as collateral. They can be volatile investments because they are linked to the price of the commodity. However, ETC avoids some of the potential pitfalls of investing in equities, according to Doyle. Doyle continued: “We’ve been exposed to gold miners from time to time, but what we’ve noticed is… you usually get some buzz around exposure to mining due to weak management. poor or bad decisions”. “And that can only create more noise that we don’t really want.” There are several ETCs for gold, such as iShares Physical Gold ETC, Invesco Physical Gold, WisdomTree Core Physical Gold, Xtrackers Physical Gold ETC and Xetra-Gold. Gold has been a strategic asset in Newton’s Real Returns strategy for more than a decade, said Doyle, because it protects against various risks and can act as an “insurance policy during periods of time.” credit stress,” said Doyle, such as the recent banking turmoil.