From the studio

Podcast:Investors Club: Fed easing and geopolitics (13 min)
Video: CIO's Devinda Paranathanthri on putting cash to work (2 min)
Video: The China equities rally with CIO's Suresh Tantia (6 min)

Thought of the day

Gold looks on track to end the week at a record high, as US data this week added to market confidence that the Federal Reserve will cut interest rates for the first time this year at next week’s policy meeting. Trading at around USD 3,650 an ounce at the time of writing, gold is within reach of an intraday high of USD 3,665 struck on Tuesday. The precious metal has already set more than 30 records in 2025 in nominal terms, according to Bloomberg, and this month's rally has taken it above an inflation-adjusted peak set more than 45 years ago.

A key driver of the recent leg up has been expectations that the Fed is ready to embark on a second wave of easing, having kept rates on hold so far this year. While Thursday's August consumer inflation data releasewas higher than what is consistent with the Fed’s annual 2% target, it is likely not sufficient to shift the US central bank’s focus away from the weakening labor market. Wholesale prices in August also fell for the first time since April. Separately, initial jobless claims for the week ending 6 September rose to the highest level since late 2021, and data from the Bureau of Labor Statistics showed that the US generated around 911,000 fewer jobs than estimated in the year to March.

But while the price of gold is now up by close to 40% so far this year, making it the best-performing major asset class, we think the metal has further room to rally. We now expect bullion to reach USD 3,900/oz by June next year, up from our previous forecast of USD 3,700/oz.

Real yields should fall further as the Fed resumes easing while price pressures remain. The US real interest rate—the opportunity cost of holding non-yield-bearing assets like gold—has dropped by more than 20 basis points in less than a month to the lowest level since 2022 amid a swift repricing of Fed cut expectations by market participants. With inflation likely to remain sticky, we expect real rates to fall further into year-end, potentially into negative territory, supporting demand for gold. These dynamics should also undermine the US dollar, which we anticipate will weaken further over the next 12 months. As gold’s negative correlation with the US dollar continues to hold, the greenback’s ongoing depreciation should also boost investment demand for gold.

Demand for gold will likely reach the highest level since 2011. Following the recent step higher in exchange-traded fund (ETF) flows, we have further raised our expectations for full-year ETF demand to just under 700 metric tons. This brings our forecast for global gold demand this year to around 4,850mt, according to our estimate, the highest level since 2011, as central bank purchases stay elevated.

Economic, geopolitical, and policy uncertainty highlight the importance of portfolio hedges. Gold has provided an effective hedge against episodes of heightened economic, political, and geopolitical risk, with the metal outperforming all major equity and bond indices this year. As uncertainty persists in these areas, sufficient exposure to gold should further enhance the diversification and resilience of a portfolio, in our view.

So, we maintain an Attractive view on gold and stay long the metal in our global asset allocation. For investors with an affinity for gold, we reiterate our recommendation for a mid-single-digit percentage allocation. Select gold miners also represent an appealing way to gain exposure to the gold price, in our view.