David Hood

UK government bond yields have risen less than those in other major economies like Germany, France, and Japan since we initially recommended overweighting gilts. This means Gilts are becoming less attractive relative to global alternatives. However, we still see modest upside for UK bonds as inflation continues to fall, wage growth slows, and the job market weakens – factors that could push yields lower. While gold appears expensive by some measures and investor sentiment is bullish, its fundamental case remains strong. Central banks continue buying gold, and it serves as valuable insurance against risks like dollar weakness, inflation spikes, or geopolitical tensions. Gold benefits when real yields fall or inflation rises, making it an effective portfolio hedge in uncertain times.

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