Recent economic data is increasing pressure on the Fed to lower rates, with Fed officials projecting up to three rate cuts before the end of the year. Gold has broken out of its summer doldrums, reaching a new all-time high of $3,600 per ounce (08.09.2025). A weak dollar and expectations of a Fed rate cut in September have boosted the precious metal’s appeal.

A recently published MIT-linked paper found the majority of enterprise investments in AI lack measurable returns, raising concerns of AI overvaluation. A closer look, however, suggests the issue lies not with the technology itself, but with enterprises deploying AI without a clear plan or defined use case.

Amid trade and geopolitical tensions, 2025 has been characterised by dynamic and evolving currency movements. This can be seen by the fall of most major currencies relative to gold. Additionally, traditional market correlations - such as the VIX-USD - are breaking down, with the US dollar no longer responding predictably to recent events.

This uncertainty raises questions about whether this is a temporary disruption or the beginning of a new monetary order where the US dollar is no longer the default safe haven currency. Market movements this year highlight the need for adaptability in an evolving global economy.

In 2025, Spain’s GDP per capita - at $36,190 - surpassed Japan‘s, which stood at $33,960, according to IMF data. It is worth noting that the Japanese yen’s 40% depreciation since 2021 has artificially lowered Japan’s dollar-denominated GDP per capita.

Nevertheless, this development marks a notable shift in global economic rankings and highlights Spain’s robust growth in recent years. Spain’s GDP growth has been driven by strong domestic demand, a thriving tourism sector, government support, population increases, and lower energy prices.

Precious Metals and Commodities

Gold and silver are expected to rise in the short to medium term, while copper, oil, and agricultural commodities are projected to  remain flat. Nonetheless, all precious metals and commodities continue to follow a long-term upward trajectory.

Market Risk Signals

Gold vs stocks forecasting model

According to the model, the point at which economic activity assets - such as equities- last outperformed gold was around Q3 2022. From that point onwards, the model predicts an outperformance of gold relative to equities (light line).

When compared to actual data on the stock-to-gold price ratio (dotted line), the trend of gold outperforming equities appears to have begun in early 2022. Whether a short-term reversal will occur remains uncertain; however, the long-term trend towards stronger gold performance remains clear.

Gold Feature

In an era where monetary policy, geopolitics, and mounting debt are reshaping investment landscapes, traditional notions of safe-haven assets are evolving. For example, despite their reputation as a cornerstone of risk management, US Treasuries have delivered a mere 1% return decade-to-date. Meanwhile, gold has emerged as the top-performing major asset, with returns of 122%.

Gold’s outperformance is all the more striking given the aggressive monetary expansion between 2020 and 2022, during which $2 trillion worth of US assets were injected into the Federal Reserve’s balance sheet.

Once regarded as the default passive strategy, the traditional 60:40 (equity–bond) portfolio is now under scrutiny, following the failure of US Treasuries to provide stability during recent inflation shocks and market sell-offs. As the investment landscape evolves in response to monetary and geopolitical developments, rethinking portfolio hedges has become crucial to long-term wealth preservation.

One alternative passive strategy that offers a similar balance - targeting growth while protecting against market declines - is the equity-gold portfolio.

In an equity-gold portfolio, the two assets play roughly equal roles and can be held in similar proportions to the traditional 60:40 portfolio. With equities providing much of the growth potential, gold replaces bonds as the portfolio stabiliser during market declines.

However, unlike bonds, gold’s stabilising effect is not directly linked to monetary policy; it does not depend on central banks lowering rates to stimulate the economy. Instead, gold acts as a hedge against the negative effects of monetary inflation, such as lower real returns and a loss of purchasing power. In such an environment, it not only safeguards gains during market downturns but also tends to outperform other assets.

30 Sep 2025 | Categories: Gold, Dollar, US, UK, Politics, Commodities

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