Why precious metals may not be golden after all

ING IM's strategist Koen Straetmans reviews the commodities market, looking at recent performance and flows in the asset class, and the risks it faces.

Precious metals have rarely been out of the spotlight recently. Indeed, since Bernanke started the QE tapering discussion, the segment has been a notable underperformer. There was, however, a part recovery when central banks in the developed markets tried to alleviate exit fears. US real yields (10-year) that had risen by over 1.2% since the end of April retraced by some 30 basis points, simply on the calming words of the Fed's president. Gold in particular has been closely correlated to the evolution of US real yields as the latter serves as its opportunity cost. Interestingly, US re...