Is gold no longer just a safe haven? Well-known institutions turn bullish while also favoring US Treasuries and tech stocks

Amid the volatile upward movement of global financial markets, renowned wealth and investment management firm Schroders has recently made significant adjustments to its asset allocation strategy. In its latest multi-asset research report, Schroders has clearly turned bullish on gold and believes that, supported structurally by ongoing central bank purchases worldwide, gold retains highly attractive allocation value in the medium to long term—even after a substantial rally this year.

The Schroders investment team points out that the core driver behind gold’s price increase has shifted from retail investor sentiment to institutional allocation by sovereign entities. This “structural foundation” from global central banks not only offsets some of the profit-taking pressure from high prices but also indicates that gold is playing an irreplaceable risk-hedging role in investment portfolios.

Meanwhile, analysis from TD Securities also supports this optimistic outlook. The firm predicts that gold prices may briefly retrace to $4,200 in the short term, with a revised target price of $5,350 by 2027.

While Schroders is optimistic about gold, it maintains a “cautious optimism” towards risk assets overall. The company retains a constructive stance on equities, the technology sector, and government bonds. The Schroders multi-asset investment team believes that the resilience of global economic growth and robust corporate profits provide a foundation for its current pro-cyclical allocation strategy.

However, Schroders has also keenly detected potential “chill factors.” The report specifically notes that valuations for artificial intelligence (AI)-related stocks are already expanding, with excessive market concentration and accumulating leveraged positions representing risks that cannot be ignored. Nevertheless, the institution believes that as long as global economic growth momentum does not materially deteriorate, this pro-cyclical allocation approach remains the optimal strategy for now.

In terms of specific sector positioning, Schroders has further strengthened its preference for the technology sector and expanded its holdings in German equities, especially favoring industrial and defense stocks with growth potential. At the same time, to capture the benefits of the commodity cycle, the firm continues to hold positions in global mining giants and energy producers.

It is also worth noting that Schroders is currently taking an active stance in the fixed income space. Based on the highly attractive real yields of US Treasuries, the company has tactically increased its holdings of US government bonds. Schroders believes that US Treasuries and gold are not opposing forces but rather complementary “ballast stones,” capable of effectively balancing the potential volatility brought by high valuations in technology stocks.

Looking ahead, Schroders advises investors to closely monitor three key “variables”: first, the dynamics of inflation data—if inflation flares up again, the logic behind allocating to US Treasuries will be put to the test; second, whether global economic growth slows more than expected; and third, whether market confidence in AI investment returns wavers. Against the backdrop of already stretched valuations, any “unexpected” development in key data could potentially spark a market correction.