Gold prices could be at the start of yet another rally, a top Standard Chartered investment official said, as central banks stock up, dollar weakens and the US dollar yield curve steepens.
“We believe this is the start of another rally in gold prices,” said Manpreet Gill, chief investment officer, Africa, Middle East & Europe at Standard Chartered, pointing to gold recently breaking out of the $4,000-level. Gill remains overweight and bullish on gold, expecting it to approach $5,000 over six to 12 months.
Gold prices have surged around 70% from ₹76,308 per 10 grams on 1 January 2025 to ₹1,53,045 now.
Gill sees central-bank demand as the bigger story. While buying can ebb and flow, central banks tend to be more price-sensitive than investors might expect, often stepping in when prices cool rather than when they are rising sharply. “The big one is still that central banks are buying,” he said, adding that interest rates and momentum are more tactical factors.
While it is hard to know where this trend eventually ends, Gill sees room for the diversification trade to continue.
Silver, an opportunistic trade
Silver, however, is a different story. Its extensive industrial use links it closer to the economic cycle, offering less of gold's hedging properties. It is also a smaller and considerably more volatile market, he said.
Standard Chartered has no silver exposure in its model portfolio and, while it has considered the metal as an opportunistic trade when the gold-silver ratio moves to extremes, Gill sees gold mining equities as a better risk-reward option for now.
In equities, the US and Asia ex-Japan are Standard Chartered’s top-ranked markets. Within Asia, Taiwan and China equities are Overweight, with Indian equities as a Neutral or core holding. In bonds, emerging-market US dollar bonds are the top preference, given their relatively low sensitivity to oil prices.
The bank is maintaining a balance between being Overweight Taiwan equities and Neutral Indian markets as valuations and positioning become stretched. “When you reach those sort of extremes, sometimes the snapback can be extremely sharp,” Gill said. While the bank remains Overweight Taiwan, it also wants exposure to Indian equities as part of a broadening trade. India, which was recently downgraded from Overweight to Neutral, offers a balance between the AI trade and traditional non-oil markets, he said.
South Korea’s Kospi has surged 110% over the past year, while Taiwan’s Weighted Index has gained 86% and Japan’s Nikkei 225 has risen 47%. In contrast, Hong Kong’s Hang Seng has fallen more than 4%, Bloomberg data showed.
Gulf oases
Gill also sees UAE and Dubai equities as attractive options for global investors looking for exposure to the non-oil economy among the Gulf countries. Unlike Saudi Arabia’s equity benchmark index, which is more closely linked to oil prices, these markets have greater exposure to population growth and non-oil sectors. “If you want to go for a non-oil trade, then you would probably go for UAE and Dubai equity markets,” he said.
Dubai and Abu Dhabi equities have largely held their ground over the past year, even as Indian stocks have struggled. Bloomberg data shows the Dubai Financial Market General Index rising just 0.08% and Abu Dhabi’s ADX General Index gaining 1.8%, while the MSCI UAE Index advanced more than 3%. In contrast, the Nifty 50 has fallen about 6% over the same period.
On inflation, Gill said moderate price pressures and rising input costs are already largely reflected in markets, including India. The bigger worry would be an unexpected oil shock. Past episodes suggest oil may need to rise towards $150 a barrel to trigger a full-blown inflation shock, he said, while a gradual rise would have a more muted impact on inflation than a sharp spike.
Gill sees another risk lurking in the Japanese yen. A sharp rise in the yen or a narrowing gap between US and Japanese interest rates could reduce the incentive for global investors to borrow in yen and invest in markets such as India, creating a potential liquidity risk.