① Société Générale recently stated that after reducing its gold positions in the first half of the year, the precious metal is once again showing appeal; ② The bank indicated that it remains strategically "bullish" on gold, viewing it as a crucial tool for hedging against currency and policy uncertainty; ③ Recently, several investment banks, including Goldman Sachs, Royal Bank of Canada Capital Markets, and UBS Group, have published bullish views on gold.
Cailian Press, September 4 (Editor: Bian Chun) As the gold market tests the initial resistance level of $4,500 per ounce once again, an international investment bank believes that now is a good time to re-enter the gold market. The bank expects gold prices to gradually recover from a correction that has lasted several months.
In its latest market report, Société Générale stated that after reducing its gold positions in the first half of the year, the precious metal is once again showing appeal.
Analysts stated: "After a significant correction triggered by the US-Israel-Iran conflict and rising expectations of Federal Reserve rate hikes, gold has recently rebounded to near $4,500 per ounce. Meanwhile, volatility has returned to normal levels, speculative positions have recovered to above their two-year average, and the put/call ratio for GLD (the gold ETF) has fallen to a six-month low, indicating a resurgence in bullish sentiment."
Although gold still faces headwinds from high interest rates and a strengthening US dollar, Société Générale noted that financial markets have largely priced in the repricing of the Federal Reserve's hawkish stance, creating a more favorable risk/reward profile for the precious metal.
The bank stated that it remains strategically "bullish" on gold, viewing it as an important tool for hedging against currency and policy uncertainty.
Société Générale indicated that the gold market has undergone a clear paradigm shift since 2022. Despite real interest rates remaining positive, gold prices have hovered near historical highs, significantly diverging from the lower price ranges suggested by traditional models.
The bank believes that continued central bank gold purchases, the de-dollarization trend, geopolitical uncertainty, and concerns over sovereign debt are providing a higher floor for gold prices, thereby limiting the downward impact of high real interest rates.
The bank also pointed out that since mid-last year, market expectations have shifted from continuing to price in monetary policy easing to discussing whether the Federal Reserve will raise interest rates one or two more times. This change has pushed the yield on two-year US Treasury bonds back above 4%, supporting the US dollar. However, despite these traditional headwinds, gold prices remain significantly higher than mid-2025 levels.
"In our view, it would take a much larger inflation shock and a far more aggressive response from the Federal Reserve to trigger another major repricing in interest rates," analysts said. "As the hawkish adjustment in financial markets has largely been digested, the downside risks for gold appear increasingly limited."
Persistent inflation is another reason Societe Generale recommends that investors strategically allocate to gold. The bank points out that a new round of U.S. tariffs, accelerated investment in artificial intelligence and infrastructure, energy price volatility, and the continued large fiscal deficits in developed economies are creating a more inflationary environment than currently anticipated by financial markets.
Furthermore, analysts believe that potential demand for gold continues to provide support. Although inflows into gold ETFs have slowed significantly this year, net inflows have remained positive overall. Meanwhile, declining volatility is enhancing gold's appeal to long-term reserve managers.
"As speculative demand weakens while official sector buying remains strong, central banks are increasingly becoming a key anchor in the gold market," said the bank's analysts. Societe Generale added that declining volatility has historically been a significant buy signal for gold, and sustained central bank demand should continue to provide a solid floor for gold prices.
Societe Generale's renewed bullish stance on gold comes as the metal attempts to recover from the sharp decline that dominated trading in spring and early summer.
Societe Generale Joins the Bullish Camp
The ranks of gold bulls are growing larger. Recently, several major investment banks, including Goldman Sachs, Royal Bank of Canada Capital Markets, and UBS Group, have published bullish views on gold.
Goldman Sachs Research recently projected that, driven by robust demand from central banks seeking to diversify their foreign exchange reserves, gold prices will rise to $4,900 per ounce by the end of 2026.
Christopher Louney, Head of Global Commodities Strategy and Middle East & North Africa Research at RBC Capital Markets, recently stated that recent gold price movements indicate that geopolitical instability, global de-dollarization, and concerns over U.S. dollar depreciation are once again in focus, with gold prices now poised to approach the "$5,000 mark."
UBS Group recently stated that Federal Reserve Chair Walsh's recent hawkish signals have raised market expectations for a rate hike in September, but the medium-term fundamentals for gold remain unchanged. The bank expects gold prices to reach $5,400 per ounce by the end of September 2027.
After taking profits and stepping aside to wait-and-see in May, Schroders' analysts recently announced that they have upgraded their outlook for gold and re-established positions in the precious metal. In its latest multi-asset outlook report, Schroders raised its rating on gold to "positive," citing factors such as robust structural demand, improved speculative positioning, and ongoing concerns regarding inflation, sovereign debt, and currency stability.
On Thursday, international gold prices rose nearly 2% after Federal Reserve Governor Waller indicated that he would support keeping interest rates unchanged if data continued to show easing inflationary pressures, prompting traders to lower their expectations for a September rate hike. Spot gold closed up 1.97% at $4,472.86 per ounce, while U.S. gold futures rose 2.8% to settle at $4,539.90.