Schroders pivots back to gold despite high real yields

The firm’s decision to re-establish long positions in the precious metal signals a shift in how it views gold’s role in a modern portfolio. While rising real yields typically pressure gold by increasing its opportunity cost, Schroders analysts argue that the current macroeconomic environment has decoupled the metal from these traditional relationships. Growing anxiety regarding the sustainability of U.S. fiscal deficits and the resulting potential for dollar debasement have redefined gold as a necessary hedge.

Institutional demand remains a cornerstone of this strategy. Beyond the Federal Reserve’s ongoing focus on inflation, Schroders points to consistent buying from China and other central banks as fundamental support. Even as the firm maintains a pro-cyclical stance elsewhere—favoring equities and commodities like energy and industrial metals—it views gold as an increasingly independent monetary asset. For Schroders, the metal no longer requires a falling-rate environment to justify its place in a multi-asset portfolio, provided the underlying risks to global debt and currency stability continue to mount.