Schroders has upgraded its outlook on gold, pointing to continued central bank purchases as the structural support even after this year's sharp rally. The asset manager pairs the gold call with a broadly constructive, pro-cyclical stance on equities, technology and government bonds, while naming accelerating inflation, a growth slowdown and stretched AI valuations as the principal risks to that view.
Schroders has become more optimistic on the case for owning gold, upgrading its view on the precious metal on the back of supportive central bank purchases even as prices have already climbed sharply this year. The UK-headquartered wealth and investment firm made the call as part of a broader multi-asset note that keeps a constructive, pro-cyclical stance across its portfolio, particularly toward equities.
Central bank buying anchors the gold case
On gold specifically, Schroders said the case rests less on near-term price momentum than on continued central bank purchases, which it expects to keep supporting the metal over the medium term regardless of how much ground it has already gained. That view sits alongside a tactical allocation to government bonds rather than in tension with it, with the firm framing both as complementary ways to capture yield and provide ballast against the risks it flags in its own equity positioning.
Equities stay in favor despite stretched valuations
The firm's multi-asset investment team pointed to resilient global growth and corporate earnings as the foundation for its general positioning, while acknowledging that a strong rally since the second half of July has pushed market expectations into what it describes as extended territory. High valuations in artificial intelligence stocks, elevated leverage and heavy market concentration were all flagged as reasons for caution. Even so, the firm said the absence of any meaningful deterioration in growth dynamics keeps a pro-cyclical stance warranted for now.
On equities, Schroders has reinforced its preference for technology and widened the range of German equities it holds, leaning into industrial and defence names it views as attractive within that market. The firm has also retained exposure to natural resources, holding a mix of global mining companies and energy producers as part of its broader cyclical positioning. Tactically, it is also positive on government bonds, pointing to attractive real yields as the rationale for a tactical allocation to US Treasuries.
What could change the picture
Schroders was explicit about what could unwind its currently constructive stance. Accelerating inflation, a meaningful worsening in the growth outlook, or a loss of investor confidence in the ability of AI-related investment to deliver on its promised returns were all named as the principal risks to the firm's positioning. With valuations already stretched by its own admission, any one of those triggers could test how durable the current pro-cyclical tilt proves to be.
Source: InvestingLive
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