In a bold move, Societe Generale has shifted 100% of its commodity allocation to gold, driven by geopolitical risks and a weakening broader commodity market, according to a report by Ernest Hoffman for Kitco News.
Société Générale (SocGen) is one of France’s largest and oldest financial institutions, founded in 1864. It is a multinational investment bank and financial services company with a global presence, offering a wide range of services, including retail banking, corporate and investment banking, asset management, and private banking.
SocGen serves millions of clients worldwide and is known for its strong presence in Europe, though it operates in many other regions. The bank has a reputation for innovation, especially in financial markets, derivatives trading, and structured finance. It supports large corporations, governments, and institutional investors with services like mergers and acquisitions (M&A), financing, and risk management.
The French bank increased its gold holdings to 7% of its total asset allocation, reflecting a 40% quarter-over-quarter rise. This pivot toward gold signals growing confidence in the yellow metal as a safe-haven asset amid ongoing uncertainties in global markets.
According to the Kitco report, Societe Generale’s analysts identified five key factors driving the gold market: geopolitics, the dollar and interest rates, central bank purchases, investor flows, and market fundamentals. While these drivers are overwhelmingly positive for gold, analysts caution that there is a lack of any significant new catalysts beyond those already priced in. Nevertheless, the bank remains optimistic, forecasting gold prices to rise to $2,800 per ounce in 2025.
Kitco mentioned that this shift in strategy is part of Societe Generale’s broader approach to asset management. In its Q4 2024 outlook, the bank highlighted the strong performance of its multi-asset portfolio, which focuses on U.S. equities, corporate credit, and gold. This portfolio has shown resilience, delivering solid returns amid increased market volatility in 2024. Societe Generale credits gold’s safe-haven status as one of the key factors behind this success, particularly as global tensions between the U.S., China, and the Middle East continue to rise.
The broader commodities sector, however, has not fared as well. Per Kitco’s report, Societe Generale has taken a bearish stance on oil and base metals, lowering price forecasts due to weakening demand.
According to Kitco, the SocGen analysts also pointed out that concerns over the U.S.-centric global financial system and the threat of sanctions have further boosted demand for gold. This has led to increased gold purchases by central banks in the Global South, supporting long-term demand for the asset.
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