Wells Fargo Investment Institute's Global Head of Equities and Real Assets, Sameer Samana, stated that a combination of factors—including Fed rate cuts, heightened uncertainty, a weaker dollar, and cryptocurrency pullbacks—has created exceptionally strong conditions for gold's next upward phase.
Samana affirmed in a Wednesday interview that gold's multi-year bull market remains intact. "The uptrend hasn't been disrupted," he said. "While further consolidation is possible—especially if the Fed delays rate cuts from December to January—the eventual easing is inevitable."
He highlighted that the Fed may turn more dovish as Trump advances personnel appointments, particularly Powell's successor, potentially finalized by December. "Kevin Hassett is currently the frontrunner," Samana noted. "Markets will increasingly scrutinize his views, which we expect to align with Governor Miran's preference for rates near 2%." This would reduce gold's opportunity cost as a non-yielding asset, he explained, adding that lower real rates typically bolster gold demand.
Samana also anticipates renewed dollar weakness: "After plunging nearly 15% from 110 to 96, the dollar's mere 3-4% rebound signals sustained bearish momentum. Over the next 12-15 months, the dollar will likely stagnate—at worst trading sideways for gold."
The strategist observed a persistent diversification trend amplifying gold's appeal. "With bonds losing their traditional diversification role amid sticky inflation and Fed rate cuts at 3% CPI, gold has emerged as a core alternative," he said.
Wells Fargo identifies weakening competitors—AI stocks and cryptocurrencies—as another gold catalyst. "The AI-driven capital inflows into U.S. markets have moderated," Samana remarked, noting that AI investments now span global equities, reducing the dollar's dominance. "U.S. political uncertainty now rivals other developed markets."
He dismissed global stocks, especially AI-related shares, as offering true diversification due to high correlation. "Investors recognize tail risks demand non-equity assets," Samana said, adding that while cryptocurrencies previously rivaled gold's diversification appeal, "only gold has demonstrated lasting resilience."
A less-noticed factor, per Samana, is gold's prolonged outperformance versus equities: "The S&P 500 peaked in gold terms in late 2021—a four-year trend most overlook."
Despite forecasting labor market softening and 2026 growth slowdown, Samana believes markets have priced in these headwinds, expecting only 5-10% equity pullbacks versus H1's volatility. "Seasonal Q4 strength may cushion stocks before economic stabilization in early-to-mid 2026," he added.
Samana framed gold's strength as structural: "A 3%-inflation Fed prioritizing labor markets effectively sacrifices bondholders. Gold becomes the logical hedge when bonds fail in high inflation." He also cited institutional "de-dollarization" trends among central banks and inflationary risks from fiscal expansionism globally.
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