Fidelity Fund increases gold allocation, betting on Fed credibility crisis and the decline of the dollar's safe-haven status

Odaily News, Fidelity International portfolio manager George Efstathopoulos said that over the past three weeks, he has doubled the gold holdings in his fund, citing increasing uncertainty in Fed policy as the catalyst. After raising the fund's gold allocation to the 5% ceiling he set himself, Efstathopoulos stated he would consider raising that cap if the dollar's status as a safe-haven asset continues to decline. Investors sold off long-term Treasuries following the Fed's July meeting, and it was against this backdrop that George began increasing his gold holdings.

"My interpretation is that this stems from a lack of Fed credibility and heightened policy uncertainty," George said. He also noted that the Treasury's unexpectedly aggressive expansion of long-term bond buybacks appears more like an attempt to "manipulate yields rather than address the root cause of why yields are rising." "The focus for gold now is no longer on rising yields themselves, but on why yields are rising." (Jin Shi)