The gold market has fulfilled its role well by bringing stable profits and diversification in the context of an unstable world. However, according to an international bank, the increasing volatility in the market today shows that it is time to reduce the proportion of holdings in this precious metal.
In the updated multi-asset portfolio strategy report for the second quarter, analysts at Société Générale (SocGen - one of the largest banks in France and Europe) said that for the first time since 2022, they no longer maintain a "weight gain" status for gold.
Accordingly, this French bank has adjusted its portfolio in a more balanced direction, reducing its gold holding to 7%, from 10% in the first quarter.
Despite reducing its weight, SocGen still maintains a positive outlook for gold and continues to maintain the price target of 6,000 USD/ounce by the end of the year.
In general, SocGen said they are aiming to balance their investment portfolio, while reducing the proportion of shares by 5% and expanding investment to commodity groups.
Notably, the bank has strongly increased the proportion of global goods to 8%, from 0% in the first quarter. Experts believe that the energy market has great growth potential.
“In the portfolio adjustment process, we focused more on long-term strategic factors. We increased allocation to commodities and expanded stock investment outside the US technology sector.
Goods play a core role in the strategy of focusing on economic sovereignty. Even when the Middle East conflict ends, oil prices are unlikely to return to the 55 USD level as previously predicted.
According to the new scenario, Brent oil prices may fall to $77/barrel in Q2/2026 and $68/barrel in Q4/2026, before rising again in the medium term, when US production peaks and OPEC regains market share. At the same time, copper prices continue to be supported by the trend of electrification and demand from data centers" - experts said.
According to experts, the high volatility of gold is the biggest factor leading to this portfolio adjustment. The bank also believes that gold may become one of the most volatile assets in the next 12 months.
“In the context of ‘safe haven’ due to the Middle East conflict, gold cannot completely compensate for the decline of the stock market in the investment portfolio. At the same time, short-term fluctuations of gold have increased sharply, surpassing many other large asset groups. In terms of correlation, gold has recently tended to fluctuate in the same direction as many other types of assets.
For risk-controlled portfolios, increasing volatility along with the positive correlation of gold with other assets is creating resistance" - experts said.
For the stock market, SocGen has reduced its proportion to US stocks, global emerging markets and domestic Chinese stocks. Conversely, the bank increased investment in European stocks (excluding the UK).
Currently, SocGen maintains a proportion of 25% of government bonds, 5% of corporate bonds and holds 5% of cash in the portfolio.
Increasing doubts about the sustainability of the AI trend are the reason we reduced the proportion of US stocks and prioritized the S&P 500 index according to the equitization method to reduce centralized risk and take advantage of broader growth opportunities. We are still increasing the proportion of Europe, as this region is benefiting from a solid cyclical recovery momentum," experts said.
