Macroeconomic uncertainty, rising geopolitical tensions and the desire to hedge against inflation have led to strong gains in gold, a classic “safe-haven” asset. Spot gold prices have soared above $2,700 an ounce, rising for a fifth day on Monday to reach a new all-time high of over $2,733 an ounce. Spot gold is up more than 30% so far this year. Michael Widmer, head of metals research at Bank of America, said there is further work to be done. “If gold doesn’t rebound now, then I’m not sure when it will. In fact, I think the fundamentals actually look pretty good,” he said on CNBC’s “Squawk Box Europe” on Monday. He is one of many analysts who expect gold prices to reach $3,000 an ounce by 2025. Traditionally, higher Treasury yields have meant lower gold prices, but Wade pointed out that the correlation between 10-year Treasury real rates (adjusted for inflation) and gold prices is not high. “Currently, lower 10-year real rates are bullish.” Gold. A rise in 10-year real rates is not necessarily negative for gold, partly because I think there is growing concern about government debt levels, especially when it comes to the U.S. election, and there is little focus on fiscal consolidation going forward,” Widmer said. With fiscal deficits rising for several years, the metals expert called gold “really attractive.” “If there are a lot of concerns about the Treasury market, gold is pretty much the ultimate safe-haven asset,” he added. Todd Jablonski is also bullish on gold’s prospects. The global head of multi-asset and quantitative investing increased his holdings of precious metals for the first time in “25 years of managing other people’s money.” His optimism stems from a number of factors, including steady growth in demand for gold from central banks and others. “This is one of the few liquid alternatives that we’re overweight today, but I do like the diversification and unique performance patterns of this asset class,” Jablonski told CNBC Pro on Oct. 16. “What we’re seeing in gold is Increased demand means supply will have to try to adjust. At high levels, he is cautious about gold in the short term. “I think falling interest rates will be a good driver for the gold market and lift gold prices over the next six to 12 months. But you’ll likely see short-term gains,” he told CNBC. The volatility… is driven in part by speculative investors. “I think people should be cautious about investing in gold right now, but that doesn’t mean they shouldn’t hold gold. “Allocation to Gold” Reid recommends that investors always hold a gold position, even though gold represents a relatively small proportion of the portfolio. “For most investors, stocks will always be the largest component of the portfolio. There will be Some fixed income to generate income and help hedge these stocks, but there should also be some gold as it offers unique hedging properties and performs well in difficult times while generating long-term returns,” he added. When asked what percentage of one’s portfolio should be invested in gold, Reid said it depends on other investments. “The way to think about how to allocate is – the more stocks or industrial metals, (or) Bitcoin or cryptocurrencies in the portfolio, the higher the target allocation to gold,” he said, recommending between 4% and 10% . Meanwhile, Principal Asset Management’s Jablonski said less than 5% of his portfolio is allocated to commodities, including gold. —CNBC’s Fred Imbert contributed to this report
