Gold prices have surged by 11% this year, maintaining levels above $2,300 per ounce, signaling robust performance despite muted initial interest in the precious metal. However, a shift in sentiment is underway as a new study reveals heightened attention from money managers and hedge funds towards gold.
State Street Global Advisors, in collaboration with the World Gold Council, unveiled findings from its annual Gold Perceptions Survey on Wednesday. The survey of 525 North American professional investors indicates a changing landscape: 29% of financial advisors plan to increase their gold allocations over the next 12 to 18 months, while 62% expect to maintain current levels, and 9% anticipate reducing allocations.
George Milling-Stanley, Chief Gold Strategist at State Street, recently adjusted his price forecast for gold in the latter half of the year, projecting a trading range between $2,200 and $2,300 per ounce. In an interview with Kitco News, Milling-Stanley emphasized that gold’s prospects hinge significantly on Federal Reserve policies, noting its enduring appeal as a safe-haven asset amid global economic uncertainty.
Despite the Fed‘s firm stance on monetary policy, which supports higher bond yields and a stronger dollar, the survey highlights sustained investor interest in gold. Milling-Stanley commented, “Advisors’ consistent allocations to gold amidst expected rate cuts indicate its role as a staple in long-term investment strategies, enhancing portfolio diversification.”
The survey also reveals a growing integration of gold into North American portfolios, with nearly 90% of advisors now including the metal, up from 76% in 2019. While uptake has increased, allocations remain varied: 32% allocate less than 1% of client assets to gold, 56% allocate between 1% and 4.9%, and 13% allocate over 5%.
Joseph Cavatoni, Senior Market Strategist at the World Gold Council, noted, “Recent price movements in gold have sparked renewed investor interest, driven by today’s economic and geopolitical uncertainties.” He emphasized gold’s role as a global asset with both strategic and tactical drivers supporting future demand.
Survey respondents cited gold’s proven track record as a diversification tool during economic uncertainty (48%) and its role as a long-term store of value (36%) as key reasons for investment. Additionally, 35% of managers indicated client demand as a driving factor.
Conversely, reasons for avoiding gold include its lack of coupon or dividend payments (54%), challenges in assessing intrinsic value (28%), and perception as a speculative asset (26%).
In conclusion, the survey underscores a shifting perspective among investors towards gold, driven by its enduring appeal in turbulent economic climates and its strategic role in diversified portfolios.
