Fidelity Doubles Gold Holdings as Faith in Fed Fades

Fidelity International has doubled its gold holdings to a self-imposed maximum of 5 percent as investors lose faith in the Federal Reserve's ability to tackle inflation. Portfolio manager George Efstathopoulos made this decision after the bond market continued to melt down and yields rose following the Fed's July meeting.

The fund sold high-yield bonds, including gilts (UK government bonds), and used the cash to buy gold, which has since rallied 14.8 percent since the beginning of August.

Efstathopoulos stated that investors are looking for action from the Fed, but instead received a lack of credibility and policy uncertainty, causing yields to rise further.