Morgan Stanley: Gold's hedging role needs to be repositioned; still maintains metals as top asset class pick

Title context: Morgan Stanley: Gold's hedging role needs to be repositioned; still maintains metals as top asset class pick Text: Gold prices have fallen steadily from US$5,600 per ounce at the start of this year to below US$4,000 per ounce recently. Despite the weak short-term trend, Morgan Stanley said it will maintain gold as its top pick among metals assets and has set a target price of US$5,000 per ounce for the second quarter of 2027. Regarding the current decline in gold prices, Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, pointed out that the U.S.-Iran conflict must end for gold prices to return to US$5,000 per ounce. He analyzed that gold has always been a traditional safe-haven tool, but the U.S.-Iran conflict has caused a major shift in global capital flows, with countries facing rising energy and food costs redirecting resources from reserve diversification to other uses. He emphasized that gold's long-term investment appeal remains, but in the short term, central banks of various countries are prioritizing economic stability and energy security rather than accumulating more gold, leaving gold under continued negative pressure. Therefore, as long as the U.S.-Iran conflict persists, pressure on the gold market will remain. Morgan Stanley also noted in its latest report that gold's role in investment portfolios needs to be repositioned. The report said that since 2020, gold has been unable to effectively hedge against stock market decline risks, and in extreme stock market selloffs it can even amplify portfolio losses. However, during severe U.S. Treasury selloffs, its buffer value has become increasingly prominent, making it a core tool against fiscal risks and sovereign credit risks.