The SNB is not signaling any interest rate hikes for the time being. Markets are currently pricing in the next rate hikes only for 2027. The low-interest-rate environment and persistently low inflation continue to support the Swiss economy and financial markets. The Swiss stock market has corrected slightly since its high in early August. This has created attractive entry opportunities in high-quality Swiss value and dividend stocks. At the same time, geopolitical risks and developments in energy prices remain the most significant sources of uncertainty.
As expected, the SNB left its key interest rate at 0% and continues to view its current monetary policy as appropriate. Although inflation has recently risen from 0.6% to 0.8%, this is mainly due to higher energy prices. Underlying inflationary pressures remain moderate, and inflation is expected to remain within the price stability range in the coming years as well.
The Swiss economy continues to be in good shape. Although strong GDP growth in the second quarter was partly driven by the pharmaceutical industry, the economy remains on a solid footing overall. Low interest rates, a slightly weaker Swiss franc, and positive momentum from abroad are supporting economic development. Accordingly, SECO has raised its growth forecast for 2026 to 1.7%. The latest positive KOF Economic Barometer also points to continued favorable development in the third quarter. This is driven in particular by robust investment activity in the construction and equipment sectors, as well as by continued solid private consumption.
SECO Economic Forecasts
GDP 2026: 1.70%
Inflation 2026: 0.60%
Key interest rates: 0.00%
Sources: Chefinvest, ZKB, SECO
As of: September 29, 2026
In the second quarter of 2026, seasonally adjusted gross domestic product (GDP) rose by 0.6% in the euro area and by 0.7% in the European Union (EU) compared with the previous quarter. In the first quarter of 2026, GDP had remained stable in the euro area and had risen by 0.1% in the EU. According to the latest forecasts from the European Central Bank (ECB), the annual real GDP growth rate will be 0.8% in 2026, 1.2% in 2027, and 1.5% in 2028.
The European economy is posting higher growth rates and is being supported by exports and the recovery in the industrial sector, but consumer demand remains subdued, and renewed pressure on energy prices could slow down the manufacturing sector. The German economy, in particular, will become a key driver of economic growth this year. The massive surge in energy prices and rising interest rates could well have stifled the upturn that was already visible at the beginning of the year. Instead, Europe is riding a wave of economic momentum.
Inflation in the eurozone stood at 3.2% in August 2026 (with energy, up 14.3%, being the strongest driver of prices), up from 2.9% in July. The ECB’s projections forecast inflation in the eurozone at 3.0% for 2026, 2.3% for 2027, and 2.0%—the inflation target—for 2028.
The labor market remains stable, and the unemployment rate in the EU stood at 6.1% in July 2026.
This month, the ECB decided to raise its key interest rate by another 25 basis points to 2.50%. The conflict in the Middle East continues to fuel inflationary pressures, and inflation is expected to remain well above the 2% target for an extended period.
The ECB signaled a more cautious assessment of inflation persistence and economic resilience, emphasizing the upside risks posed by energy prices as well as potential second-round effects on core inflation. We consider another rate hike likely, which would bring the interest rate to 2.75% by the end of the year.
The STOXX Europe 600 is projected to post year-over-year earnings growth of around 24% for the second quarter of 2026; even excluding the energy sector, growth still exceeded 10%. In September, sentiment brightens significantly once again, and growth rates continue to accelerate. The resilient economy is supporting companies, whose earnings outlook has recently brightened further. While higher interest rates and rising energy prices are creating headwinds, the combination of a solid economy, improved earnings expectations, and, more recently, more moderate valuations points to a positive outlook for the European stock market.
GDP Growth 2026: +0.80% (E)
EU Inflation 2026: +3.10% (E)
Current 3-month Euribor: +2.61%
Daniel Beck, Member of the Executive Board
Sources: European Commission, Eurostat, LGT Bank AG
As of: September 29, 2026
The economic outlook remains positive despite increasing monetary policy headwinds, and corporate earnings continue to be strong. Major investments in AI are driving economic activity, and the increased use of AI in business processes is leading to higher productivity. Higher inflation rates and interest rates are having a dampening effect on economic growth, and geopolitical risks (the U.S.-Iran conflict) remain present. We expect slightly higher volatility leading up to the midterm elections on November 3, followed by a positive market trend through the end of the year.
The Flash S&P Global US Composite PMI (Purchasing Managers’ Index for the service and manufacturing sectors) rose by a whopping 2.4 points to 58.4 in September 2026 compared to the previous month, according to preliminary calculations, marking a multi-year high. Both the PMI for the services sector (+2.2 to 58.7 points) and that for the manufacturing sector (+3.6 to 56.7 points) contributed to this growth. This 6-month leading indicator thus signals a further acceleration in economic growth compared to previous months. According to its July 2026 forecast for the U.S. economy, the IMF expects growth of 2.30% for 2026 and 2.20% for 2027.
In August, following a summer dip, 162,000 jobs were created outside the agricultural sector, indicating a resilient labor market. The unemployment rate remained unchanged from the previous month at a low 4.1%.
At its meeting on September 16, 2026, the Fed raised the federal funds rate by 0.25% to a target range of 3.75–4.00%. The decision was unanimous. In doing so, the new Fed Chair, Kevin Warsh, demonstrated his independence from the U.S. President—who has been vehemently calling for an interest rate cut—much to the general relief of the market. The market widely expects another 0.25% interest rate hike by the end of the year. There are good reasons for this. Inflation rose to 3.4% in August (+0.40% compared with the previous month), and core inflation (excluding energy and food prices) rose to 2.4% (+0.30%). As a result, inflation has remained above the Fed’s 2% target for quite some time.
For the second quarter of 2026, earnings reports from S&P 500 companies exceeded forecasts with an impressive 23% year-over-year increase. Expectations for third-quarter 2026 earnings are also well above the historical average, with growth projected at 29%. The current stock market valuation is thus supported by solid earnings growth. With an S&P 500 price-to-earnings ratio of 19.2 (based on analysts’ earnings estimates for the next 12 months), the market valuation has continued to decline in recent months and is now below the 5-year average of 19.8 but still slightly above the 10-year average of 19.0.
GDP 2026 (IMF): +2.30% (E)
Inflation 2026 (IMF): +3.20% (E)
Fed Funds Rate: +3.75–4.00%
Sources: Trading Economics, FuW, U.S. Bureau of Labor Statistics, Statista, IMF, FMOC
As of: September 29, 2026
The Chinese stock market continues to appear moderately valued by historical standards and, in particular, relative to the U.S. stock market. Numerous established companies in the technology, consumer, and industrial sectors are still trading at a discount. Key risks include, in particular, geopolitical tensions, the ongoing weakness in the real estate sector, and a potential slowdown in global trade. For international investors, a differentiated assessment of individual companies and sectors therefore remains crucial.
The Chinese economy continues to grow at a moderate pace. Government stimulus measures, accommodative monetary policy, and ongoing investment in technology, infrastructure, and industrial capacity are providing a boost to economic growth. At the same time, structural weaknesses in the real estate sector and subdued consumer demand remain significant headwinds for economic development.
One positive development worth noting is the persistently low inflation rate. This gives the Chinese central bank additional leeway to support the economy through favorable financing conditions. As a result, Chinese monetary policy remains growth-oriented by international standards. The environment in the foreign exchange market has also stabilized recently. Although the renminbi has depreciated against the U.S. dollar over the past few years, it has recently shown greater resilience.
Should the Chinese domestic economy continue to stabilize, this could support the stock market and create room for a revaluation of individual companies in the medium term. Supportive monetary policy, additional fiscal measures, and the recently more stable currency environment are providing tailwinds in this regard.
IMF Economic Forecasts
GDP 2026: 4.60%
Inflation 2026: 1.20%
Shibor: 1.36%
As of: September 29, 2026
Conclusion: The investment case for Japan remains intact, but it is evolving. Extremely loose monetary policy is no longer the key driver. The focus is increasingly on corporate reforms, rising returns on capital, investment, and Japan’s technological strength. Japan thus remains an attractive strategic diversification component in a global equity portfolio.
Expected GDP 2026: 0.60%
Expected inflation 2026: 2.10%
Japanese key interest rate: 0.64%
Mimi Haas, Lic. rer.pol. HSG, M.A. in Banking and Finance HSG, Partner
Sources: OECD, Bank of Japan, and IMF
As of: September 28, 2026
The current Chefinvest indicators do not paint a uniform “risk-on” or “risk-off” picture. The differences between countries and regions are now significant. Our signals are particularly positive for Japan, Hong Kong, Switzerland, and Brazil. The U.S. also remains positive overall, while the broader eurozone is falling significantly behind.
External strategists are generally positive as well, but they are placing different emphases. Citi has recently become more aggressive and has actively increased its equity holdings. UBS remains positive but is paying closer attention to the effects of higher interest rates. Deutsche Bank is confident in robust earnings momentum and is more optimistic about Europe in particular than Chefinvest. LGT continues to favor the U.S.
The recent interest rate hikes by the Fed, the ECB, and the Bank of Japan, as well as the rise in the 10-year U.S. yield to around 5.2%, are undoubtedly increasing pressure on stock valuations. However, this effect is already visible: The S&P 500’s forward P/E ratio has fallen by about 17% since November. Crucially, higher interest rates have so far weighed more on valuations than on corporate earnings. Citi continues to see robust earnings revisions, high margins, and no significant deterioration in corporate financing. Higher interest rates are therefore unwelcome, but as long as growth and earnings keep pace, they are not yet a reason for a general “risk-off” move.
UBS makes an important caveat: It would become problematic if the interest rate hikes turned into a pronounced tightening cycle, causing growth and earnings to slow significantly. Historically, this distinction has been crucial for stock performance.
For Chefinvest, this means more valuation discipline and selectivity, but not fewer stocks.
Chefinvest’s outlook for the U.S. has recently improved. For the S&P 500, the one-month signal is slightly positive, while the twelve-month outlook is among our strongest signals. The Nasdaq is positive for both one and twelve months. Only the Dow Jones remains negative in the short term. Consequently, our model currently favors growth and quality over the broader cyclical market within the U.S.
Citi is already taking it a step further and has increased its allocation to U.S. stocks. U.S. large-caps, in particular, are favored due to strong earnings revisions, high interest coverage, and valuations that have become more attractive. This is fundamentally in line with our signal, even though we are not currently increasing the equity allocation across the board. The U.S. remains a strategic core market, with a preference for profitable growth companies and large-caps.
Switzerland is among the more compelling Chefinvest markets. Both the SMI and SMIM are showing a clearly positive signal in the short term. The outlook remains positive over a 12-month horizon as well, albeit less pronounced. From a sectoral perspective, Switzerland is well-positioned for the current environment: Healthcare, high-quality industrials, and financials combine earnings quality with comparatively defensive characteristics.
This mix appears particularly attractive in a higher-interest-rate environment. Switzerland therefore remains one of our preferred regions—less spectacular than AI, but occasionally offering the pleasant side effect of actual profits.
The Euro STOXX is showing a slightly negative signal at Chefinvest for both the one-month and twelve-month horizons. For the CAC 40, the picture is even weaker. France thus remains among the markets where our model offers little cause for enthusiasm.
Deutsche Bank is significantly more positive. It points to robust European corporate earnings and notes that Europe can benefit more strongly than in previous technology cycles from investments in industry, infrastructure, electrification, and AI infrastructure. Europe’s industrial companies, in particular, could thus indirectly become winners of the AI cycle.
Germany is therefore of particular interest . The DAX is showing a slightly weaker signal in the short term but turns clearly positive over a 12-month period. Here, Chefinvest and Deutsche Bank’s views are converging over the longer term. For us, Germany therefore remains a market not worth chasing in the short term, but an interesting one in the medium term, particularly due to its exposure to automation, electrification, mechanical engineering, and infrastructure. Austria stands out positively: The ATX is constructive across both time horizons. Italy is also improving, shifting from a slightly negative short-term signal to a positive 12-month signal.
Japan is now among the most compelling regions. The Nikkei is showing a positive signal at Chefinvest for both one month and twelve months.
Citi confirms this signal on a fundamental basis and has since raised Japan from a slight underweight to a moderate overweight. Earnings revisions are particularly noteworthy: positive revisions now outnumber negative ones by a ratio of 2.6 to 1, while corporate profitability is at a historic high. Deutsche Bank also takes a positive view of Japan. This indicates an unusually high degree of consensus among Chefinvest, Citi, and Deutsche Bank. However, given a year-to-date (YTD) performance of already around 33%, we wouldn’t recommend chasing every market move…
The Hang Seng is particularly interesting: Despite a negative year-to-date performance so far, Chefinvest is showing positive signals for both the one-month and twelve-month horizons. This distinguishes Hong Kong from markets where our model merely projects existing momentum. Here, it signals a potential improvement following prior weakness.
UBS also remains positive on Chinese technology, AI, and semiconductor localization. Deutsche Bank sees opportunities in technology and advanced manufacturing, while real estate and domestic consumption remain weak. Our positive assessment therefore remains selective: For Chefinvest, China/Hong Kong is primarily a technology and industrialization play, not a blanket bet on the Chinese economy.
When it comes to sectoral positioning, Chefinvest and the external strategists are much more aligned.
Industrials remain one of our preferred themes. AI capex, reindustrialization, electrification, power grids, and infrastructure form a multi-year investment cycle. This is precisely where Deutsche Bank’s analysis is important: While Europe has fewer large AI platform companies, it does have numerous companies needed for the physical implementation of the AI investment cycle. AI infrastructure also remains central. The investment thesis is broadening from the major technology platforms to semiconductors, data centers, power supply, cooling, automation, and engineering. Cybersecurity is now gaining additional importance. Citi expects spending on AI security to grow by approximately 65% annually between 2026 and 2028—about five times as fast as total cybersecurity spending. This offers an opportunity to participate in the AI cycle.
Healthcare remains our preferred defensive growth sector. The combination of stable earnings, structural growth, and lower sensitivity to economic cycles is particularly attractive in the current interest rate environment. We remain more cautious on Consumer Discretionary. Higher financing costs and persistently elevated inflation are hitting consumption-dependent business models harder; this is also a reason for our weaker assessment of France.
Government Bonds
The performance of government bonds is once again being driven primarily by inflation and monetary policy. After the past few years were initially marked by sharp interest rate hikes and subsequently by the first signs of easing, the picture has recently shifted again. In September, the European Central Bank raised its key interest rates by 25 basis points in response to renewed inflation risks. The U.S. Federal Reserve also raised its key interest rate by 25 basis points in September. Above all, higher energy prices, geopolitical uncertainties, and a continued robust economy are making it difficult for central banks to return to their inflation targets.
For government bonds, this means that yields are likely to remain at attractive levels for the time being. At the same time, uncertainty about the future path of interest rates is increasing volatility, particularly for longer maturities. U.S. Treasuries continue to offer attractive current yields and remain an important diversifier. In Europe, we favor government bonds with high credit ratings, while higher government debt and political uncertainties in individual countries must be taken into account with increasing differentiation.
Overall, government bonds remain an important anchor of stability in the portfolio. However, a balanced approach to duration continues to make sense as long as the future path of inflation and interest rates remains unclear.
Investment-Grade Corporate Bonds
In our view, investment-grade bonds remain one of the most attractive segments within the bond market. The balance sheets of many companies remain solid, and high-quality issuers are generally able to absorb the higher interest rates. At the same time, the rise in base rates enables attractive total returns without requiring investors to take on significantly higher credit risks.
However, credit spreads remain low. Investors are thus compensated primarily through the current coupon rate rather than through a further significant narrowing of spreads. At the same time, a greater differentiation between companies and sectors is emerging. Companies with high future financing needs, in particular, are being viewed increasingly critically by the market.
Investment grade therefore remains a core component of our bond portfolio. Quality, solid cash flows, and manageable debt levels are clearly the top priorities.
High Yield
In the high-yield segment, a clear distinction based on credit quality remains essential. For BB- and high-quality B-rated issuers, fundamentals remain solid in many cases and total returns are attractive. At the same time, credit spreads—particularly in the higher-quality high-yield segment—are very tight and offer only a limited buffer against an economic downturn.
The situation is markedly different for weaker debtors. In the CCC segment, risk premiums have widened noticeably recently. The market is thus beginning to distinguish more clearly between companies with sustainable business models and highly indebted issuers.
High yield therefore remains a tactical allocation for us. We continue to favor BB-rated and select B-rated issuers and avoid chasing high nominal yields at the expense of credit quality.
Emerging Market Bonds
Emerging market bonds continue to offer high nominal yields. At the same time, the environment has become more challenging due to rising interest rates in developed countries, a strong U.S. dollar, geopolitical tensions, and higher energy prices. Countries with high foreign-currency debt, in particular, remain vulnerable.
In addition, the fundamental situation varies greatly across emerging markets. While some countries have solid current accounts and sufficient foreign exchange reserves, debt sustainability remains a problem for others.
The key question, therefore, remains whether the additional yield sufficiently compensates for the higher political, currency, and credit risks. For broad-based emerging-market bonds, we continue to view this trade-off as unconvincing at present and remain cautious accordingly.
Conclusion
The bond market environment has changed compared with the previous quarter. Hopes for steadily falling interest rates have given way to renewed concerns about persistent inflation. The recent interest rate hikes by the ECB and the Fed show that the fight against inflation is not yet over.
For investors, this is not necessarily a negative development: Higher interest rates ensure that high-quality bonds continue to offer attractive current income. Government bonds and investment-grade bonds therefore remain our preferred segments and simultaneously fulfill their important role as building blocks of stability and diversification within the portfolio.
In the high-yield sector, we remain selective and focus on higher credit ratings. We continue to take a cautious view of emerging-market bonds, as the additional yield does not currently seem sufficient to us given the risks involved.
Overall, we remain constructive on high-quality bonds; however, given the renewed uncertainty surrounding inflation and interest rates, we would continue to maintain a balanced position in terms of duration.
Mimi Haas, Lic. rer.pol. HSG, M.A. in Banking and Finance HSG, Partner
Sources: MarketMap, Bloomberg, and DWS
As of: September 28, 2026
EUR/USD – Higher Interest Rates on Both Sides of the Atlantic
The EUR/USD currency pair is currently heavily influenced by renewed monetary policy tightening. The ECB raised its key interest rate by 25 basis points in September. This move is driven in particular by persistent inflation risks resulting from higher energy prices and geopolitical tensions. The ECB now expects an average inflation rate of 3.0% for 2026 and has signaled that inflation is likely to remain above its target for the time being.
The U.S. Federal Reserve has also changed course, raising the federal funds rate by 25 basis points to 3.75–4.00% in mid-September. The U.S. economy remains robust, while inflation is above the central bank’s target. The key factor determining the future course will be whether inflationary pressures ease or whether further monetary policy measures become necessary.
This development has recently provided fresh support for the dollar. EUR/USD is currently trading around 1.14. The key factor in the coming months will likely be which central bank needs to tighten policy more aggressively. Since both the Fed and the ECB are taking action against rising inflation rates, the previously clear divergence in monetary policy has diminished. However, the continued strength of the U.S. economy and the higher absolute interest rate level suggest some short-term support for the dollar.
EUR/CHF – Interest Rate Differential Increasingly Favors the Euro
For the EUR/CHF pair, the fundamental environment has changed compared to the spring. The SNB once again left its key interest rate unchanged at 0% in September. At the same time, Swiss inflation remains comparatively low and is within the range the SNB considers compatible with price stability. The National Bank therefore currently sees no immediate reason to tighten its monetary policy.
In contrast, the ECB has raised interest rates again. The resulting widening interest rate differential between the euro and the franc makes euro-denominated investments relatively more attractive and generally points to some stabilization or appreciation of the euro against the franc.
EUR/CHF is currently trading around 0.94. At the same time, the Swiss franc remains structurally supported. Should geopolitical risks escalate again, its role as a safe haven is likely to quickly come to the fore once more.
The SNB has also reiterated that it can intervene in the foreign exchange market if necessary. This means it continues to have a tool at its disposal to counteract excessive appreciation of the franc.
Conclusion on EUR/CHF: The euro’s higher interest rates improve its position relative to the Swiss franc. This points to a stabilization of the EUR/CHF exchange rate and reduces upward pressure on the Swiss franc in the short term. Nevertheless, we do not expect the euro to strengthen significantly, as the Swiss franc remains structurally in demand due to its safe-haven status and solid fundamental conditions.
USD/CHF – U.S. Interest Rate Advantage Meets the Safe-Haven Swiss Franc
In the case of USD/CHF, the divergence in monetary policy is particularly pronounced at present. While the Fed has raised its benchmark interest rate to 3.75–4.00%, the SNB remains at 0%. This creates a significant interest rate advantage in favor of the U.S. dollar.
This supports the dollar against the Swiss franc. At the same time, the structural strength of the Swiss franc should not be underestimated. As geopolitical or economic uncertainties increase, the Swiss currency remains one of the most important safe-haven currencies.
The future performance of USD/CHF is therefore likely to be driven by two opposing forces: the significant U.S. interest rate advantage and the robust U.S. economy on the one hand, and safe-haven demand for the Swiss franc on the other.
Conclusion on USD/CHF: In the short term, the large interest rate differential points to support for the U.S. dollar against the franc. At the same time, the dollar’s appreciation potential is likely to remain limited, as the franc quickly regains favor during periods of heightened uncertainty. USD/CHF thus remains caught between the dollar’s carry advantage and the franc’s safe-haven premium.
Overall Conclusion
Monetary policy conditions have changed significantly in recent months. The Fed and the ECB are responding to the renewed rise in inflation risks with tighter monetary policy, while the SNB is keeping its key interest rate at 0%. As a result, interest rate differentials are regaining importance as drivers of exchange rates.
In the short term, the U.S. dollar remains supported by higher interest rates and the robust U.S. economy. The euro is also receiving increasing support against the franc due to the European interest rate advantage. The Swiss franc, on the other hand, remains structurally strong despite the lack of an interest rate advantage and is likely to remain in demand, particularly amid geopolitical or economic uncertainties.
For portfolios, this means: USD positions are currently benefiting more from the interest rate advantage, while EUR investments have become more attractive relative to the CHF; meanwhile, the Swiss franc retains its important role as a currency of stability and diversification.
Mimi Haas, Lic. rer.pol. HSG, M.A. in Banking and Finance HSG, Partner
Sources: MarketMap and Bloomberg
As of: September 28, 2026
We expect a continuing struggle between the U.S. and Iran over control of the Strait of Hormuz in the coming weeks, leading to continued reductions in oil shipments through this bottleneck and, as a result, a WTI oil price ranging from $85 to $105 per barrel.
The struggle over the Strait of Hormuz is causing oil prices to fluctuate. After the WTI oil price fell to $70 per barrel in July, it reached $105 per barrel in early September. It is currently hovering around $93 per barrel.
Surprisingly, the months-long stalemate in the Arabian Gulf (also known as the Persian Gulf) and the resulting reduction in oil shipments have not led to a supply shortage. This is partly because (1) some countries tapped into their strategic oil reserves, (2) alternative land routes (pipelines) were used as workarounds, and (3) oil shipments were carried out through the Strait of Hormuz under Iranian conditions or with an escort from the U.S. Navy.
The Americans are banking on Iran’s economy collapsing under the sanctions, while the Iranians are counting on high oil prices and rising inflation to cause the Republicans to suffer an electoral defeat in the midterm elections.
Sources: OPEC, FuW, MarketMap, International Energy Agency (IEA)
As of: September 29, 2026
Gold is currently caught between a more restrictive U.S. monetary policy and continued robust structural demand. On Friday afternoon, September 25, the price of gold stood at around $4,283 per troy ounce, down about 2.1% from the previous week’s level. In particular, rising U.S. bond yields and expectations of further interest rate hikes weighed on the precious metal. Recent developments show that geopolitical uncertainty and inflation concerns alone do not guarantee rising gold prices. (ca.marketscreener.com)
On September 16, the U.S. Federal Reserve raised its benchmark interest rate by 0.25 percentage points to a range of 3.75–4.00%. It justified the decision by citing persistently high inflation coupled with robust economic growth. As a result, monetary policy remains a significant headwind for gold. Since gold does not generate current income, more attractive interest rates on liquid investments and bonds increase the opportunity cost of holding gold. Real interest rates—that is, interest rates adjusted for inflation expectations—are particularly crucial in this context. (federalreserve.gov)
The situation in the Middle East also has a two-way effect. Escalations can boost demand for safe-haven assets, but at the same time, higher energy prices can intensify inflationary pressures and thus raise interest rate expectations. Conversely, a de-escalation can reduce geopolitical risk premiums, while simultaneously improving interest rate prospects through falling oil prices. Therefore, which of these effects predominates is crucial for the direction of the gold price.
Support continues to come from central banks, although their demand is less consistent than the notion of a continuous buying trend might suggest. According to the World Gold Council, net purchases rose to approximately 289 metric tons in the second quarter. Poland and China were among the leading buyers. At a total of approximately 345 metric tons, however, demand in the first half of the year remained at its lowest level for a first half since 2022. The diversification of currency reserves remains a structural argument in favor of gold; however, central bank purchases do not constitute a reliable floor for the price. (gold.org)
In addition, investment demand has regained importance. In August, physically backed gold ETFs worldwide recorded inflows of approximately $18 billion. Their gold holdings rose by 121 metric tons to a record high of 4,189 metric tons, driven in particular by North American and European funds. This development reflects broad investor interest. At the same time, ETF outflows can amplify short-term corrections when interest rate or market expectations change. (gold.org)
Gold Mines: Earnings Potential with Additional Risks
Gold mining stocks allow investors to participate in producers’ profits. If the gold price rises while costs remain largely stable, their margins and cash flows can grow disproportionately. However, this operational leverage also works in the opposite direction: falling gold prices or rising production costs can significantly weigh on profitability.
The industry continues to benefit from high gold prices but is facing increasing cost pressures. According to the World Gold Council and Metals Focus, average all-in sustaining costs—the costs of production including essential expenses for maintaining operations—stood at $1,785 per ounce in the first quarter of 2026, 16% above the previous year’s level. Nevertheless, thanks to high gold prices, the industry achieved exceptionally strong margins and cash flows. However, these quarterly figures should not be extrapolated unchanged to the coming months: lower selling prices, as well as higher energy, material, and mining royalties, could reduce margins again. (gold.org)
When investing in gold mines, the focus should therefore be on the quality of the companies: solid balance sheets, competitive costs, reliable production, and a disciplined investment policy. In addition, political risks in producing countries and future capital requirements must be taken into account. A high gold price alone does not make a mining stock a bargain. Gold mining stocks remain equity investments and can suffer significant losses during a general stock market decline, even if gold remains relatively stable.
Conclusion We remain constructive on gold over the medium to long term, but expect increased volatility in the short term. In our view, the diversification of central bank reserves, as well as geopolitical and fiscal uncertainties, continue to support a strategic allocation to gold. Currently, the more restrictive U.S. monetary policy and the risk of further rising real interest rates argue against a rapid, broad-based expansion.
We therefore prefer to maintain the strategic gold allocation within the established ranges and to consider staggered additions in the event of setbacks when underweight. Gold can contribute to diversification but does not offer guaranteed protection against every market decline. We view gold mining stocks as a selective addition within the equity allocation. Their focus is on income opportunities; the strategic hedging function is primarily covered through direct investment in gold.
Mimi Haas, Lic. rer.pol. HSG, M.A. in Banking and Finance HSG, Partner
Sources: Degussa, Reuters, and the Financial Times.
As of: September 28, 2025
United Kingdom