2 days ago
15
Gold has long been considered a safe-haven asset – a store of value during economic uncertainty, market downturns and geopolitical tensions. In recent years, interest in gold has grown steadily, supported by sustained demand from retail investors, institutions and central banks worldwide.
In October, gold prices surged past US$4,000 (S$5,190) an ounce – a new high driven by factors including a weaker US dollar, a US Federal Reserve rate cut and a prolonged US government shutdown. While some short-term volatility is expected, UOB maintains a positive longer-term outlook. The bank cites macroeconomic factors such as a softening dollar, easing monetary policy and continued safe-haven demand as key drivers.
That said, as with any investment, potential risks remain. According to UOB, speculative buying, a short squeeze on the US dollar, slower-than-expected rate cuts or renewed inflation concerns could limit gold’s momentum. Investors facing losses in other asset classes may also liquidate gold positions to raise cash – especially during periods of broad market stress.
Despite these factors, Mr Kelly Chia, head of investment strategy at UOB Private Bank, said the structural case for gold is strong. “Think of gold as the portfolio’s seatbelt – not that exciting, but invaluable when the road turns rough.”
A ROLE IN DIVERSIFICATION
One of gold’s most compelling attributes is its role in portfolio diversification. Unlike equities or bonds, gold tends to move independently of traditional asset classes and has often maintained or even gained value during periods of market stress.
As a non-yielding asset – one that does not generate income such as dividends or interest – gold carries an opportunity cost compared to income-producing investments. But for investors seeking stability and downside protection, it can serve as a strategic counterbalance within a broader portfolio.
According to UOB, a prudent allocation would be 5 to 10 per cent of a portfolio. The right amount, however, depends on an individual’s risk tolerance and investment goals. “Gold can help reduce volatility and hedge against macroeconomic risks,” said Mr Chia. “But every investor should weigh the benefits against their long-term needs and financial profile.”
UNDERSTANDING YOUR OPTIONS
Gold can be held in various forms, each offering different trade-offs in terms of cost, convenience and exposure.
A flexible option is a gold savings account, which allows small-scale investment in gold, transacted digitally in local currency. These accounts are offered by several banks in Singapore and are particularly useful for investors looking to enter the market without holding physical gold.
One example is UOB’s Gold Savings Account (GSA), which supports purchases starting from as little as 5g. It is also the only such account in Singapore backed by tangible gold assets, and offers the flexibility to convert GSA holdings into physical gold.
Physical gold – such as bars and coins – offers tangible ownership, and is recognised and valued globally. However, it requires secure storage and insurance. UOB is currently the only bank in Singapore that offers physical gold investments to retail customers. These can be purchased at the gold counter at its main branch, or bought online and collected from the same counter within five working days.
Investors who prefer not to handle physical gold may consider gold certificates. These are typically sold in kilobars and can be exchanged for cash or physical bullion. As certificates are backed by the issuing financial institution, investors should consider the issuer’s credibility.
For experienced investors seeking more direct market exposure, the Loco London gold market (code: XAU) offers a globally recognised and highly liquid option. Unlike certificates, XAU holdings are not tied to any one institution, providing an alternative that emphasises transparency and independence. At UOB, XAU trading is available for clients with the financial capacity and market expertise to manage larger trades – with a minimum purchase equivalent to US$25,000.
Other instruments include gold ETFs, which track the price of gold and are traded on stock exchanges via brokerage accounts. These are typically low-cost and liquid, though they may not always mirror spot gold prices precisely. Structured products linked to gold prices or ETFs are also available. “Structured products may offer enhanced yield through coupon payouts or performance-based returns, making them a balanced solution that combines peace of mind with growth opportunity,” Mr Chia said.
A STRATEGIC ASSET FOR UNCERTAIN TIMES
While gold may not generate income in the way that bonds or dividend-paying stocks do, it plays a valuable role in a long-term investment strategy – especially during periods of market volatility, inflation or geopolitical tension.
“As investors continue to navigate an uncertain global landscape, gold remains a relevant and resilient asset for those seeking to strengthen their portfolios with a stable and time-tested store of value,” said Mr Chia.
To learn more about investing in gold, visit UOB’s website or speak to a UOB representative.
This publication shall not be regarded as an offer, recommendation, solicitation or advice to buy or sell any investment product and shall not be transmitted, disclosed, copied or relied upon by any person for whatever purpose. Any description of investment products is qualified in its entirety by the terms and conditions of the investment product and if applicable, the prospectus or constituting document of the investment product. Nothing in this document constitutes accounting, legal, regulatory, tax, financial or other advice. If in doubt, you should consult your own professional advisers about issues discussed herein. If you do not wish to seek such advice, consider carefully whether any product mentioned is suitable for you.
The information contained in this publication, including any data, projections and underlying assumptions, are based on certain assumptions, management forecasts and analysis of known information and reflects prevailing conditions as of the date of the article, all of which are subject to change at any time without notice. Although every reasonable care has been taken to ensure the accuracy and objectivity of the information contained in this publication, United Overseas Bank Limited (“UOB”) and its employees make no representation or warranty of any kind, express, implied or statutory, and shall not be responsible or liable for its completeness or accuracy. As such, UOB and its employees accept no liability for any error, inaccuracy, omission or any consequence or any loss/damage howsoever suffered by any person, arising from any reliance by any person on the views expressed or information in this publication.
Gold investments are not deposits and not guaranteed by UOB nor insured under the Deposit Insurance Scheme, and are subject to risks. Gold value and fees can fluctuate with international and/or local gold markets, and foreign exchange markets. Losses, including the loss of your principal investment, can be incurred from such an investment. Investment in gold provides no dividend yield or interest, and prices would have to rise sufficiently over the investment period in order to yield a profit on sale.
UOB Gold Savings Account is not insured under the Singapore Deposit Insurance Scheme. Your balance fluctuates with the market value of gold, and there is no guaranteed interest or capital protection. This is an alternative to purchasing gold bars or certificates.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
