Following a surge of nearly 13% within a single week, gold experienced a pullback exceeding $1’000, reflecting exceptional volatility. This movement was amplified by the frenzy surrounding silver, whose price dropped by more than 40% over the course of three days. By mid-last week, optimism toward precious metals had clearly become irrational, making a correction inevitable.
Nonetheless, we remain confident in the medium-term outlook for gold: fundamentals remain strong, and for the past two years, the metal has alternated between upward movements and consolidation phases of approximately four months. The rise that began in January resembles the conclusion of the previous bullish phase. We anticipate a consolidation above $4’500/oz in the coming months; in our view, any further decline would represent a buying opportunity.
As for silver, the excess has been more pronounced, and while the fundamentals are supportive, they are less robust. We therefore favour a cautious stance toward this asset.
The US dollar has recently broken through key technical levels, both on the broad DXY index and against major currencies such as the Swiss franc, the euro, and the British pound. This breach of support marks a new stage in the weakening trend of the greenback that has been unfolding over recent months and confirms the relevance of adopting a more cautious stance toward dollar exposure within portfolios.
In this context, we have decided to further reduce the exposure to the dollar across all investment grids denominated in CHF, EUR, and GBP. The exposure to the greenback has thus been brought down to 9%, a decrease of 3%. This significant underweighting of the US currency is driven primarily by a risk management rationale. At this stage, the dollar retains further downside potential, particularly due to persistent divergences in monetary policies. The Federal Reserve is engaged in a rate-cutting cycle, whereas several European central banks are nearing the end of their easing phase, gradually eroding the yield advantage previously enjoyed by the dollar.
Moreover, the current US administration has generally maintained a tolerant stance regarding the weakness of the greenback. Certain recent statements by Donald Trump may even be interpreted as a subtle endorsement of a weaker dollar, which is seen as a lever to support the competitiveness of American industry.
It is important to emphasize that this latest reduction in dollar exposure is primarily a tactical measure aimed at controlling volatility and limiting short to medium-term currency risk. Should the identified risks fail to materialize or should the macroeconomic and monetary environment evolve more favourably, a renewed increase in dollar exposure would remain entirely conceivable.
Indeed, since the implementation of our decision, the dollar has experienced a modest rebound. This has been partly driven by Donald Trump’s announcement of Kevin Warsh's nomination as the next Chair of the Federal Reserve. His recent public remarks and interventions have helped reassure investors about the credibility and future orientation of US monetary policy.
Finally, adjustments in the foreign exchange market have not been limited to the dollar. The Swiss franc appears to be entering a new bullish phase and has reached a new high against the euro. Consequently, we have also reduced the exposure to euro to 3% (-2%) in CHF-denominated grids. We will closely monitor the response of the Swiss National Bank in the coming weeks. Targeted interventions on the foreign exchange market are expected from the SNB to curb the strength of the franc, particularly in a geopolitical context that reinforces its role as a safe-haven currency.
All these adjustments are being implemented primarily through the strengthening of currency hedging strategies.
Thus far, 165 companies in the S&P 500 have reported their earnings. Reported profits have exceeded analysts’ consensus expectations by nearly 10%. This positive momentum provides solid support for US equities, which remain richly valued. This week, 120 additional companies are scheduled to release their results.