Gold beyond records
- The recent rally in gold prices signals more than just a market trend; it indicates, in our view, the beginning of a gradual transition from a US-centric international monetary system to a more multipolar one.
- Gold is gaining traction as a structural portfolio diversifier, and we believe that prices have the potential to reach $5,000 an ounce by the end of 2028. Supportive factors for gold prices include structural demand for diversification by global investors, geopolitical uncertainties, and central banks’ reserve diversification at a time of dollar weakness.
Global Investment Views
The Fed’s employment mandate taking centre stage
US bond yields have declined over the past couple of months, and gold has touched records levels. Global and US equities have also reached new highs on the back of expectations of continued economic strength in the US, the monetary easing cycle, earnings resilience, and AI-led momentum. We see an inherent contradiction here, but agree with the monetary easing aspect. The contradiction arises from the view that if the Fed implements rate cuts mainly to address a slowing economy, then the effects of a slowing economy should already be evident in weak labour markets, consumption, and eventually in corporate earnings.
