Gold Prices Rise as Investors Bet on Bullion Amid Trade Volatility
TLDR
- Institutional investors are reallocating capital as global recession fears rise, driven by concerns over former U.S. President Donald Trump’s evolving trade policy
- Bank of America’s April 2025 Fund Manager Survey found that 82% of global fund managers expect weaker economic growth this year
- Gold emerged as the top asset class, with 42% of respondents naming it the best-performing asset in 2025, up from 23% in March
Institutional investors are reallocating capital as global recession fears rise, driven by concerns over former U.S. President Donald Trump’s evolving trade policy. Bank of America’s April 2025 Fund Manager Survey found that 82% of global fund managers expect weaker economic growth this year — the highest pessimism in over three decades.
Gold emerged as the top asset class, with 42% of respondents naming it the best-performing asset in 2025, up from 23% in March. It has returned 25% so far this year. The SPDR Gold Shares ETF (GLD) surpassed $100 billion in AUM, and gold prices recently breached $3,300/oz. Expectations of U.S. dollar depreciation are also driving gold demand, with a net 61% of managers predicting a weaker dollar, the highest since 2006.
Managers have reduced equity exposure, becoming the most underweight in global stocks since July 2023. The once-favored tech sector saw allocations fall to their lowest since November 2022, while investors increased holdings in cash (now at 4.8%), fixed income, utilities, healthcare, and staples. Funds like FLCO, VHT, IDU, and FTSA are seeing inflows as managers rotate into more defensive positions.
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Points clés à retenir
The latest asset allocation shift highlights how institutional investors are preparing for prolonged volatility. Beyond gold, there’s growing momentum toward cash, which now yields over 4%, making it an attractive defensive play. The cash level, at 4.8%, approaches the 5% contrarian signal BofA uses to suggest equity buying opportunities amid extreme pessimism. The move into staples, healthcare, and utilities reflects a classic risk-off rotation. Funds like Vanguard’s VHT and iShares’ IDU offer exposure to these sectors. Meanwhile, tech exposure has dropped significantly, with fund managers net 17% underweight. For context, this marks the sharpest tech pullback since late 2022. The fixed-income rebound is also gaining strength. As interest rates peak or potentially decline, institutional flows into investment-grade corporate bonds and sovereign debt continue, as evidenced by inflows to ETFs like FLCO. With gold now viewed as the most crowded trade, overtaking even the “Magnificent Seven,” the institutional consensus is clear: safety, not growth, is the top priority.
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