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HSBC halves strategic gold allocation as inflation allure fades

Published on Jan 24, 2013 9:00 PM
 
 A branch of HSBC bank is seen, in central London in this March 6, 2011 file photo. HSBC halved the allocation of gold in its strategic portfolio in favour of equities and treasury inflation-protected securities (TIPS) to reduce volatility, the bank said in a report, taking a much less favourable view of the metal as an inflation hedge. -- PHOTO: REUTERS

LONDON (REUTERS) - HSBC halved the allocation of gold in its strategic portfolio in favour of equities and treasury inflation-protected securities (TIPS) to reduce volatility, the bank said in a report, taking a much less favourable view of the metal as an inflation hedge.

The bank cut gold's weight in its three-year strategic portfolio by 8 per cent to 7 per cent and by 9 per cent to 7 per cent in its tactical portfolio.

As the relationship between gold and United States inflation has slightly broken down over the past year, HSBC now sees TIPS providing a more reliable hedge against inflationary pressures.

Although economic headwinds remain, with ongoing US debt ceiling negotiations and euro zone growth woes, major tail risks that the global economy faced at the start of last year have retreated considerably, it said.

 
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