Consistent Belief in Gold
Portfolio managers at French bank, Société Générale, continue to hold a core position in gold, making up 6% of its multi-asset portfolio strategy. The bank stands its ground amidst increasing exposure to US equities and reducing its investment in bonds. Société Générale believes in the enduring value of this precious metal, anticipating its value to breach $2,000 per ounce as central banks struggle to tame inflation pressures.
Higher Gold Market Projections Foreseen
Bank analysts expect a drop in 10-year US rate forecasts by 2024’s end. With the battle against inflation becoming difficult, forward Consumer Price Index (CPI) projections might need to increase, causing gold to appreciate to $2,200 per ounce. Centred on these observations, gold maintains its status as a long-term inflation hedge, with central bank demands providing continued support for its prices.
Bonds and Equities Diversification
The bank’s report showed an increased cash position from 10% to 14%, a reduced global bond exposure from 29% to 20%, and an increased global equity allocation from 35% to 45%. While Société Générale maintains a 5% allocation to broader commodities, it also reduced its corporate bond position to 10% from 15%. These changes demonstrate the bank’s efforts to diversify risks and maximize returns.
Outlooks and Predictions
Despite being more optimistic about the economy’s health, Société Générale analysts still anticipate a shallow and short-lived recession at the start of 2024. But with a considerable stake in gold, the bank positions itself to navigate any impending economic turbulence efficiently.