August has seen the largest fall in sentiment towards gold since May 2013, according to the Lloyds Bank private banking investor index, meaning it has gone from the second strongest asset class last month to the fifth weakest in August.
Net investor sentiment for the asset class declined 24 percentage points from last month and 13 percentage points from this time last year, to 11 per cent.
Japanese shares saw the second biggest monthly decline in sentiment, falling 5 percentage points to minus 6 per cent; its third consecutive monthly fall.
The fall in Chinese markets in the past few months has likely taken its toll on sentiment towards the neighbouring equities.
However, despite the decline, overall Japanese equities are on a “substantial recovery path”, largely due to the Bank of Japan’s monetary policy support programme.
For the first time since the survey began in March 2013, all four sterling-denominated asset classes displayed the strongest investor sentiment.
Net sentiment remains strongest for UK property at 54 per cent, followed by UK shares (37 per cent), UK government bonds (20 per cent) and UK corporate bonds (18 per cent).
Sentiment towards eurozone shares saw its first increase in three months, rising 4 percentage points to minus 44 per cent.
Ashish Misra, head of portfolio specialists at Lloyds Bank Private Banking, said that while they would expect to see gold do well in times of volatility, investors have generally held their nerve and reached out to other asset classes for returns, noting that with the price of gold falling to a five year low last month, the potential long-term outlook is modest.
“With improvement in net sentiment scores for eurozone shares, we should expect increased interest in the asset class over the coming months as the situation in Greece improves.”
donia.o’loughlin@ft.com
