SocGen continues to hold 7% of its portfolio in gold and sees a path to $4,000
NEW YORK (March 25) Growing doubts regarding American exceptionalism are creating a rotation in investment across the global economy. In this environment, investors should hold on to their gold as an important defensive asset, according to the latest report from Société Générale.
Last week, the French bank published its Multi-Asset Portfolio Strategy for the second quarter, and it continued to hold a core position in the precious metal.
At 7%, gold remains SocGen’s biggest commodity position in its portfolio, unchanged from the previous quarter.
“Gold remains a strong momentum play, in a context where the redefinition of geopolitics under the US administration triggers significant policy reactions,” the analysts said.
Although gold prices are currently consolidating above $3,000 an ounce, SocGen expects prices to eventually move higher. The French bank sees gold prices averaging around $3,300 an ounce in the fourth quarter.
The analysts said that geopolitical uncertainty continues to support gold as an important global currency. They also highlighted conditions that could drive gold prices to $4,000 an ounce.
“As the geopolitical situation remains very unstable, the de-dollarization process is likely to continue, implying central banks worldwide will continue to buy gold unabated. With the risks skewed toward a weaker dollar and central banks likely to accelerate de-dollarization due to heightened geopolitical uncertainty, we remain very positive on gold,” the analysts said. “The gold price could get a further significant boost, probably toward $4,000/oz, if the Russian central bank’s €210bn in frozen assets are seized to support Ukraine. This would set a precedent and push non-Western aligned countries to accelerate central bank reserve de-dollarization to protect against any sanctions and seizure of bank accounts.”
In other defensive plays, the analysts have increased their cash positions but have rotated out of the U.S. dollar and increased their euro and Japanese yen holdings.
The bank holds no cash in U.S. dollars, down from 5% in the first quarter. At the same time, euro positioning has increased to 8%, from no holdings previously. The portfolio also holds 7% in yen, an increase from 5%.
It’s not just the U.S. dollar that SocGen is rotating out of. The bank has reduced its exposure to U.S. equities, dropping its holdings to 40%, down from 45%.
“The end of US exceptionalism and expansionary fiscal policy in Europe is driving interest away from the US,” the analysts said in the report.
“The new administration in Washington has created a very high level of generalized uncertainty, which goes beyond trade policy itself,” the analysts added. “In the US, the MAP reiterates its bearish earnings stance on Tech. Outside the US, Trump’s policies are forcing greater integration in Europe and may even nudge China to rebalance towards consumption. This could well extend the positive momentum on European and Chinese equities.”
Along with gold, SocGen sees potential in copper and remains bearish on oil.
“We think it is too early to bottom fish on oil, as the drill baby drill policy and downward risks to US growth still offer a downside asymmetry to this asset class. We continue to prefer copper,” the analysts said.
“For copper, we are leaving our 2025 forecast in place at $10,000/t but are adjusting our 2026 target down to $11,000/t,” the analysts added.
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