Barclay’s bull or Pearce take? Talking gold, plus a green hydrogen stock pick

Sam Jacobs

3 hrs ago

Technology, high-growth stocks could lose out from Biden's capital gains tax plan

Windy day around Australia with warnings for all but one state

Each Friday, corporate advisory firm Barclay Pearce highlights the key trading themes of the week, along with which companies and sectors * readers should be keeping their eye on.

© * Australia Barclay’s bull or Pearce take? Talking gold, plus a green hydrogen stock pick

Gold

Barclay’s head of trading, Trent Pearce, kicked things off this week with an update on the precious metal following some steady price gains over the past week.

After repeatedly closing below $US1,700 an ounce in March for the first time since June last year, prices have moved back towards $US1,800 in April.

Among the notable market developments, Primmer highlighted a key shift in China during the week, which saw Chinese authorities increase the quotas for gold imports by domestic banks.

China is typically one of the largest gold importers in the world. However gold purchases slowed down materially during the pandemic which means last week’s shift could have a material impact on global demand.

“I don’t think it will be too long before we see $US2,000/oz an ounce again,” Primmer said.

“A lot of people might think it’s fairly vanilla holding gold, but I believe it’s still an asset you need exposure to as part of a balanced portfolio.”

Along with the demand-side developments in China, Primmer said gold has also been proven as a good store of value in the event of rising inflation.

“These are reasons why gold is a good hedge against the market coming off a bit from record-high levels,” Primmer said.

Inflation

Speaking of inflation, Primmer said the prospect of higher CPI is definitely a talking point among professional investors.

But ultimately, Barclay Pearce shares the view that it’s unlikely to be a 2021 problem.

“Talking to other brokers and some of the larger investment banks, the rhetoric around inflation and interest rates is pretty considerable,” Primmer said.

“Obviously the economy is growing, but I think the anxiety is that inflation increases too fast which flows through to rates, and then what the impact is on the economy?”

“But I don’t think there’s too much of a concern in the short term about interest rates,” he said.