The low price of gold has failed to entice managers to back the precious metal, in spite of its value nearing a four-year low.
The gold spot price fell to $1,244 per troy ounce last week, meaning it was not far above the $1,200 mark, a price it has not been at since it rose past that level in 2010.
Investors usually flock to gold in times of stress as a hedge against inflation or when currencies are being debased.
The fact gold is falling suggests, in part, investors are comfortable with inflation levels and are bullish on equities.
Neil Gregson, a natural resources fund manager at JPMorgan Asset Management, said he had 11.8 per cent exposure to gold in his portfolio at present – “the lowest it has ever been”.
The manager said the fund’s underweight to gold in 2013 helped its full-year relative returns and acknowledged he still had reservations about the metal.
“We remain nervous about the outlook for the gold price, given Federal Reserve tapering, and have made sure that portfolio exposure in this subsector is skewed towards the lower cost producers,” he said.
“We have seen periods where the gold price has outperformed, but until exchange-traded fund liquidations come to a halt, we will not be adding meaningfully to our gold positioning.”
The manager added he expected the gold price to remain rangebound “without a significant catalyst for further gains”.
Seven Investment Management chief investment officer Chris Darbyshire said he too was bearish on the precious metal.
“It is not even on the radar for us,” he said.
“It did have a good run at the beginning of the year, but that was more to do with pockets of demand that are not really consistent with our view of the world.”
Mr Darbyshire said gold was something investors tended to buy in “extreme circumstances”, adding that quantitative easing had been a “damp squib” in terms of its inflation-stoking side effects. Gold is used as a hedge against inflation and so as inflation had “not ignited”, Mr Darbyshire said there was less of an investment case for gold.
Albemarle Street Partners’ director Clive Hale said support for the gold price at $1,200 was “key”, adding gold and gold-mining shares may have seen a turning point but he would not “rule out some more short-term downside”.
But Henderson Global Investors’ James de Bunsen said the multi-asset team had been increasing exposure to gold this year, claiming it was a “valid thing to hold in portfolios”.
“Inflation is not uppermost in people’s minds but that is why it is a good, cheap hedge for inflation that is unexpected,” he said.
“There are headline numbers about inflation which look like it is well under control and even disinflation in Europe with some worried about deflation, but there are little warning signs that potentially inflation could come back quicker than people expect.”