Société Générale Forecasts Gold Price Surge Amid Geopolitical Divergence
Société Générale's latest portfolio rebalancing strategy is bullish on gold and copper prices, according to Huitong Finance. The bank continues to overweight equities and commodities while reducing holdings in government bonds.
The report highlights geopolitical divergence, concerns about US dollar credibility, and continued central bank gold purchases as structural support for gold prices. Cyclical factors are also building up, with the bank forecasting that real interest rates will decline in the latter part of the cycle, lowering the opportunity cost of holding non-interest-bearing assets like gold.
The bank analysts stated: 'Central banks are continuously purchasing gold while reducing holdings of US Treasuries. Geopolitical divergence, coupled with worries about fiscal and monetary credibility, has led to strong demand for alternative reserve assets.'
Société Générale forecasts gold prices at $4,750/oz in Q4 2026, break above $5,000/oz in Q2 2027, and move to $5,250/oz in Q3 2027. Copper prices are expected to reach $14,750 per ton in Q4 2026, remain at that level in Q1 2027, rise to $15,000 in Q2, and $15,250 in Q3.
The bank's rates team notes that the US faces a high risk to debt sustainability, with interest expenses rising and net interest payments as a share of GDP approaching 5% by the mid-2030s. The average interest rate on US outstanding debt is about 4%, significantly higher than the 2.3% needed to stabilize the debt-to-GDP ratio.