LONDON, Nov 29 (Reuters) - Investors should sell gold in 2008 to take advantage of falling prices as the dollar steadies, Goldman Sachs said on Thursday, naming the strategy as one of its top 10 tips for next year.
The bank expects an easing of the fears that have paralysed credit markets. It also sees the dollar trading more steadily than it has this year.
These trends would lessen the “safe haven” appeal of the precious metal, which this year has helped gold to its highest in almost three decades.
“We would now use a short exposure in gold, expressed in US Dollars, to capitalize on a gradual relaxation of credit concerns in the financial sector over the coming months, and as an avenue to benefit from the prospect of a stabilization in the US Dollar,” Goldman Sachs said.
A U.S. central bank campaign of bringing down interest rates would lower the chances of recession, Goldman said in a report listing trades it recommends for the year ahead.
Investors have this year seen gold as a sensible way to invest money on the grounds that the precious metal retains and often appreciates in value in economically and politically turbulent times.
It has been one of the strongest-performing assets in financial markets in 2007, as the dollar has plumbed historic lows against other currencies.
On the spot market, gold XAU= touched a 28-year peak of $845.40 per ounce earlier this month, and year-to-date gains are more than 25 percent.
By contrast, in equity markets the MSCI World Index .MSCIW0 is up 7 percent, and the FTSE all-share index .FTAS is down less than 1 percent.
Reporting by Daniel Magnowski, editing by Michael Roddy