Schroders has become more optimistic on gold, upgrading its view on the precious metal on the back of supportive central bank purchases even as prices have already climbed sharply this year. The UK-headquartered wealth and investment firm made the call as part of a broader multi-asset note that keeps a constructive, pro-cyclical stance across its portfolio, particularly toward equities.

The firm’s multi-asset investment team said resilient global growth and corporate earnings remain the foundation for its overall positioning. At the same time, it noted that a strong rally since the second half of July has pushed market expectations into what it describes as extended territory. High valuations in artificial intelligence stocks, elevated leverage, and heavy market concentration were all highlighted as reasons for caution.

Even so, Schroders said the lack of any meaningful deterioration in growth dynamics means a pro-cyclical stance remains warranted for now. The firm’s gold upgrade adds to a growing list of asset managers pointing to central bank demand as the structural underpin for prices, highlighting how official-sector buying has become an important part of the market backdrop alongside broader portfolio positioning.

On equities, Schroders has reinforced its preference for technology and widened the range of German equities it holds, leaning into industrial and defence names it views as attractive within that market. The firm has also retained exposure to natural resources, holding a mix of global mining companies and energy producers as part of its broader cyclical positioning.

Tactically, Schroders is also positive on government bonds, citing attractive real yields as the rationale for a tactical allocation to US Treasuries, where inflation-adjusted returns look appealing relative to other fixed income options. That view sits alongside the gold upgrade rather than in tension with it, with the firm framing both as complementary ways to capture yield and provide ballast against the risks it flags in its own equity positioning.

On gold specifically, Schroders said the case rests less on near-term price momentum than on continued central bank purchases, which it expects to keep supporting the metal over the medium term regardless of how much ground it has already gained. That matters for investors watching the asset mix more broadly, because the firm’s decision to pair a gold upgrade with continued equity and technology exposure signals confidence that the current cycle has further to run, even as it acknowledges that valuations sit in extended territory and that the market is increasingly reliant on growth and earnings delivering without disappointment.

Schroders was explicit about what could unwind its currently constructive stance. Accelerating inflation, a meaningful worsening in the growth outlook, or a loss of investor confidence in the ability of AI-related investment to deliver on its promised returns were all named as the principal risks to the firm’s positioning. With valuations already stretched by its own admission, those are the main variables the firm says could test how durable the current pro-cyclical tilt proves to be.