Regarding whether the bull market in gold has ended, James Luke, Senior Portfolio Manager of Gold and Commodities at Schroders, said that extreme oil price incline is likely to impact all asset classes in the short term, including gold. However, the macro environment is completely different.

Schroders believed that, when assessing gold’s medium- to long-term risk-reward profile from an asset allocation perspective, the key lies in whether the two major trading themes, naming the 'currency depreciation' trade, driven primarily by fiscal concerns, and the 'de-dollarization' trade, driven mainly by geopolitical concerns such as the 'weaponization' of USD and US-China tensions—will come to an end as a result of the current events in the Middle East.

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If the answer is that the aforementioned transactions will consequently come to an end, it is possible that gold prices have already peaked in this cycle. If the answer is no, the current period could be viewed as a good buying opportunity.

Schroders believed that the answer is no. The geopolitical landscape is shifting from US unipolarity to multipolar great power competition. This trend is likely to persist amid weakening confidence in global institutions and supply chains, unless the US/ Israel achieve a landslide victory.

Meanwhile, current developments have raised the possibility of stagflation and a heavier defense spending burden. The probability of recession is rising, and the fiscal positions of G7 countries continue to deteriorate, with debt and deficit expansion trends set to persist. War is highly likely to be seen as the next fiscal shock, while the likelihood of worsening fiscal outlook of different countries is considerable.

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