Faced with the Federal Reserve's upcoming new round of loose monetary policy and continued high inflationary pressure, Societe Generale announced in its latest quarterly multi-asset portfolio strategy that it would increase its gold holdings from 7% to an upper limit of 10% to enhance its risk hedging capabilities, while liquidating its crude oil positions, making gold the only direct commodity exposure.



The bank expects gold prices to continue to rise and has turned bearish on the crude oil market. At the same time, it will optimize its overall investment portfolio by making slight adjustments to stock and cash holdings to cope with global economic and geopolitical uncertainties.

As the Federal Reserve prepares to restart accommodative monetary policy amidst high and sticky inflation, Societe Generale announced adjustments to its multi-asset portfolio strategy, significantly increasing its gold exposure to mitigate potential risks. In its quarterly strategy report released Wednesday, the bank announced it had increased its gold holdings from a previously stable 7% to 10%, reaching the portfolio's maximum overweight limit. This adjustment was accompanied by the liquidation of a 3% crude oil position held prior to the third quarter, leaving gold as the only direct commodity exposure in the multi-asset portfolio (MAP).

Societe Generale has maintained an overweight position on gold since late 2022. Analysts note that demand for gold as an alternative store of value will increase due to lower real yields driven by falling interest rates and high inflation, providing strong support for gold prices. They forecast that the average gold price will reach $3,825 per ounce in the fourth quarter of 2025, rising further to $4,128 per ounce in 2026. Furthermore, the global trend of de-dollarization and challenges to the dollar's dominance further strengthen gold's appeal as a monetary asset. Analysts emphasize that central banks continue to view gold as a strategic asset for investment diversification and reserve management, and that central bank gold purchases will continue even amidst high gold prices.

At the same time, the bank has turned bearish on the crude oil market. Previously, in the third quarter, Societe Generale had favored tactical opportunities in crude oil due to anticipated geopolitical uncertainty, but now believes that geopolitical risks have taken a back seat, with supply and demand fundamentals becoming the dominant factor. Analysts predict that weak demand and growing supply will put pressure on oil prices, with Brent crude oil prices falling to $60 per barrel by the end of 2025 and further to $52 per barrel by the end of 2026.

Regarding its overall portfolio, Societe Generale anticipates that the Federal Reserve will initiate interest rate cuts amidst relative economic stability in the United States. Historically, a dovish Fed policy shift significantly boosts global stock markets, not just the US market. Therefore, the bank increased its US stock holdings by 2 percentage points to 27% and reinvested its cash holdings by reducing them from 10% to 5%. Furthermore, the bank maintained its holdings of US inflation-linked bonds at the upper limit of 5% to further strengthen risk protection.