House Views update – Upgrading gold from less attractive to neutral

We are upgrading gold to neutral

After maintaining a positive view on gold since April 2024, we downgraded our outlook in late January near the highs and reduced it further over the summer.

At the time, gold’s diversification benefits had become more limited, declining alongside both stocks and bonds, while also breaking below key technical support levels.

However, consistent with our philosophy of keeping an open mind and following the weight of the evidence, conditions have improved, leading us to upgrade gold back to neutral. With gold still about 15% below its recent highs, the evidence now supports a more balanced view.

Key factors supporting the upgrade:

• Real yields have stabilized. Rising real interest rates were a key headwind for gold. More recently, real yields have stopped rising, while the Treasury’s recent decision to increase purchases of longer-dated bonds could help ease upward pressure on rates.
• Technical trends have improved. Gold has reclaimed its 200-day moving average, a positive technical development that suggests downside momentum has faded.
• Central bank demand remains resilient. Despite concerns that purchases could slow, recent data indicate central banks continue to add to their gold holdings, providing an important source of support.
• A softer U.S. dollar backdrop. Recent U.S. data, including cooling inflation, softer payrolls, and a dovish Federal Reserve hold, has tempered rate-hike expectations and pulled the dollar off its highs, historically a favorable backdrop for gold.