JPMorgan believes that gold has become the most prominent hedge in markets as concerns about the independence of the US Federal Reserve escalate, reshaping investor strategies across asset classes.
Analysts at the bank noted that recent market reactions to political headlines reveal clear shifts in investment positioning.
In fixed income markets, short bets on exchange-traded funds tracking long-term US bonds, such as TLT, have increased amid concerns about increased inflation risks and higher term premiums if the Fed's independence is threatened.
In equity markets, there has been a growing bias toward value stocks over growth stocks, which the bank directly links to growing concerns about the future of central bank independence.
In commodity markets, the analysis suggests that the possibility of excessive Fed easing and an economy operating at overcapacity could boost demand for industrial inputs such as copper and oil.
But the most prominent beneficiary of this scenario remains gold, which JPMorgan describes as "the most visible expression of the Fed's independence bet." Since US President Donald Trump's attempt to remove Federal Reserve Board member Lisa Cook, the bank has observed a sharp increase in long positions in gold futures.
According to analysts, these developments illustrate how political factors can transcend traditional economic considerations to become a primary driver of market trends, enhancing gold's role as a key refuge in times of political and monetary uncertainty.
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