The value of gold remains unchanged, but other metals are “more fragrant”? FTSE Russell: The key is these two themes!
Indrani De, head of global investment research at FTSE Russell, recently stated that gold remains a key anchor in the investment portfolio in an increasingly volatile macroeconomic environment. However, investors looking for more proactive long-term commodity opportunities should also pay close attention to metals related to artificial intelligence (AI) and the global energy transition. The value of gold has not changed. In the latest interview, De pointed out that the investment value of gold has not changed fundamentally, and that this precious metal still benefits from structural demand from central banks, geopolitical uncertainty, and the continued de-dollarization trend.
Indrani De, head of global investment research at FTSE Russell, recently stated that gold remains a key anchor in investment portfolios in an increasingly volatile macroeconomic environment. However, investors looking for more proactive long-term commodity opportunities should also pay close attention to metals related to artificial intelligence (AI) and the global energy transition. In the latest interview, De pointed out that the investment value of gold has not fundamentally changed, and that the precious metal still benefits from structural demand from central banks, geopolitical uncertainty, and the continued de-dollarization trend. However, these bullish factors are increasingly being offset by rising real interest rates as the Federal Reserve maintains its tightening stance. She further explained that gold is caught between two opposing forces - a traditional inflation hedge and an uncertainty hedge. The usual "tailwinds" remain due to de-dollarization and central bank purchases of more gold, but at the same time, rising real yields pose a headwind. "These competing forces have kept gold in a relatively balanced position," she said. While De still sees gold as an important strategic allocation, she noted that the broader commodity system is entering a new long-term phase driven by two major structural themes: artificial intelligence and the global shift to green energy. “If you look at the commodities sector, there are a lot of other things happening right now that are attracting more attention from commodity investors,” she said. “We are clearly in the artificial intelligence transformation stage and indeed in the process of green transformation.” Although oil prices have soared due to the US-Iran war, De explained that the Middle East energy crisis has fundamentally changed the way people think about renewable energy investments. This transformation is no longer viewed solely as an environmental issue, but increasingly as an important issue for national security and economic competitiveness. "The situation in the Strait of Hormuz shows us that energy security is economic security," she said. "In the short term, countries will try to obtain all fossil fuels they can, but in the long term, this will provide a stronger impetus for green transformation." This is at the heart of FTSE Russell's latest analysis, which sees the Iran conflict accelerating a structural shift towards electrification, renewables and domestic energy production, rather than just triggering yet another temporary rise in fossil fuel demand. The company said the current energy shock could further drive investment in solar, batteries, electric vehicles, grids and energy efficiency technologies as governments work to reduce their reliance on imported oil and gas. The study also noted that global investment in clean energy is now about twice the level of investment in fossil fuels, while falling solar panel and battery costs have significantly improved the economics of electrification. At the same time, electric vehicles are continuing to replace global demand for oil, suggesting that the current geopolitical crisis may accelerate this transformation process that has already begun. “These trends will obviously create demand for certain commodities,” and while not explicitly supporting any specific commodity, De said that in the current environment, copper and silver are expected to benefit from the same long-term factors driving electrification. The firm's research also points to a surge in spending on artificial intelligence infrastructure as another driver of commodity demand. FTSE Russell estimates that the five largest U.S. technology companies will invest more than $600 billion in AI infrastructure this year, and annual investment is expected to exceed $900 billion by 2028. The spending continues to support demand for semiconductors, electrical equipment, data centers and the industrial metals needed to build these facilities. She emphasized again that “the long-term trend of artificial intelligence transformation and green transformation is driving people to pay more attention to this type of goods.” (