On the eve of the new year, analysts at Societe Generale (a French multinational banking and financial services group, one of the largest banks in Europe) said they continue to hold a 10% stake in the multi-asset portfolio.
The French bank kept its gold allocation unchanged as it reduced the share of US anti-inflation bonds to zero and cut the share of corporate bonds by half to 5%.
In a year when the fixed income market faced many difficulties and the weakness of the USD reduced the common currency yield of USD-denominated assets, the SGMAP portfolio still operated well thanks to balanced allocation.
The theme of expanding performance between our assets is clearly reflected in the developments of many stock markets as well as other assets such as gold. In the coming time, we expect this expansion trend to continue in the context of falling interest rates in the US" - analysts said in the latest report.
Analysts reiterate their forecast of gold prices reaching $5,000/ounce by the end of next year.
individuals continue to diversify their assets and increase their holdings of gold through gold bars, gold bars and ETFs.
We recommend buying when prices are adjusted, because un branched central banks will continue to diversify reserves, reduce their dependence on USD-denominated assets, and because gold provides effective protection against many risks (including the possibility of the Fed switching to a more dovish stance after a change in senior personnel)" - the report stated.
Company Generale maintains an optimistic view on gold as it expects the US Federal Reserve (Fed) to implement a strong monetary easing policy. The bank expects inflationary pressures to ease next year, but risks in the US labor market are rising.
Although the federal funds rate has dropped from 5.5% to 4%, the real rate is still high. This shows that monetary conditions, after adjusting to inflation, are still relatively tight. Our economists predict that the Fed will continue to cut by another 50 basis points before April next year, generally in line with current market expectations.
If this scenario occurs, monetary policy will move closer to neutrality, thereby supporting the process of gradually loosening financial conditions," analysts said. "After all, the dual task of the Fed - balancing inflation control and employment - along with political pressure in curbing food prices before the election, will act as a strong anchor for policy interest rates in the period up to 2026".
These factors reinforce the case for a cautious approach to tightening currencies and increase the likelihood of further easing if growth barriers become more apparent.
In addition to the potential for price increases, Societe Generale also appreciates the role of gold as a tool for portfolio diversification, in the context of the correlation between the US stock market and bonds still higher than the historical average.
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