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AI trade remains work in progress, says Goldman Sachs' Eric Sheridan

AI trade remains work in progress, says Goldman Sachs' Eric Sheridan

CNBC29-05-2025

Eric Sheridan, Goldman Sachs Managing Director, joins 'Closing Bell Overtime' to talk the recent slate of earnings and what takes tech stocks higher.

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Gold's rapid ascent to the US$3,300 per ounce range is surely fuelling FOMO among investors who might have ignored the precious metal this year. BMO's head of exchange-traded funds (ETFs) says while it may look overbought at these levels, there's a good case for adding gold to your portfolio. Gold futures (GC=F) have climbed more than 25 per cent in 2025, following banner years for gold in both 2024 and 2023. Rising purchases by central banks, U.S. President Donald Trump's trade war, Russian President Vladimir Putin's war in Ukraine, and general unease about the trajectory of the global economy have all played a role. 'You could certainly make a case that gold, on a monthly basis, does look incredibly overbought here,' BMO's Bipan Rai said in an interview with Yahoo Finance Canada. While it generates no yield, investors have long turned to gold as a safe-haven investment in times of economic upheaval and war. Prices have also benefited from central banks purchasing at the highest level since the late 1990s, and mounting fears about U.S. debt. 'There are palpable concerns with respect to whether or not the U.S., at least from an administrative perspective, is overusing sanctions,' Rai added. 'You have some of the countries that are not necessarily aligned with the United States trying to circumvent that, moving away from dollars and holding more of their savings in gold. Certainly that has been one of the key reasons for gold's performance.' To his point, China's central bank added more gold to its reserves for a seventh-straight month in May. According to a recent report by London-based consulting firm Metals Focus, central banks worldwide are on track to buy 1,000 metric tons of gold this year, about eight per cent less than the record high of 1,086 in 2024. Meanwhile, correlation between U.S. stocks and bonds is challenging the stability of the traditional 60/40 portfolio of equities and fixed-income. Rai said this tends to happen during periods of stickier-than-expected inflation, creating 'nightmare scenarios' for portfolio managers. Goldman Sachs recently advised clients to make a higher-than-usual allocation to bullion 'following the recent failure of U.S. bonds to protect against equity downside.' 'There is a risk, and not an immaterial risk, that you have your traditional assets more strongly correlated with each other, including stocks and bonds,' Rai said. 'That inevitably will also mean that there's going to be more demand for something like gold as that diversifier in the portfolio.' 'All that suggests to me that there's upside risk for gold,' he added. Last week, RBC Capital Markets called for stable near-term prices in 2025, raising its year-end spot estimate to US$3,350 per ounce, rising to US$3,600 by the end of 2026. London-based Capital Economics also expects a new all-time high next year near US$3,600. Goldman Sachs is yet more bullish, calling for prices to hit $4,000 by mid-2026. Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist. Download the Yahoo Finance app, available for Apple and Android. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

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