CICC: Short-term allocation value of gold is relatively superior to other non-cash assets

Every Day Economic News AI Express. A research report from China International Capital Corporation (CICC) points out that over the coming months, inflation in the world’s major economies may rise significantly, growth faces downside risks, and global assets may be entering a new set of challenges. The forecast is that the main impact of this bout of stagflation will be reflected as a temporary disruption; the inflation peak will be clearly lower than the level seen in 2022, and global asset performance will not be as bad as in 2022. Based on calculations using oil futures forward contracts, the U.S. inflation peak in this cycle is expected to occur around early to mid-June, close to 4%. The forecast is that U.S. inflation will fall back again in the second half of the year. Combined with growth pressure and financial risks, the Federal Reserve may still continue cutting rates in the second half. Looking over the medium term, it is hoped that the Fed’s easing trade will return, providing fresh support for assets such as stocks, bonds, and gold, with particular optimism about the long-term performance of China’s equities. In the short term (the next 1 to 2 months), the market faces uncertainty, so it is recommended to maintain a certain level of cash holdings. From a win-rate perspective, gold’s near-term allocation value is relatively superior compared with other non-cash assets.

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