What gold reveals about the new world order

Emerging economies are gaining ground in the new world order. Expanding trade routes, new cross-border settlement systems, and growing demand for raw materials are giving emerging countries the opportunity to assert their national interests and economic influence. These new dynamics are impacting financial assets, with the surge in gold prices reflecting the new forces at play. As US policies reshape trade flows and the importance of multilateral institutions diminishes in favor of new regional ones, investors should assess the implications for their portfolios.

Gold continued its impressive rally, rising 11% in just one month, bringing its year-to-date gains to 58% and significantly outperforming most stock market indices and financial assets. While the precious metal has also experienced periods of high volatility, these fluctuations do not call into question its long-term trajectory or the strength of its fundamentals. For some observers, this extraordinary rise is linked to the erosion of the US dollar’s value. Gold gains ground when the dollar depreciates. Sustained and widespread demand from both central banks and individual investors, concerned about geopolitical tensions, the risk of a recession in the United States, the ongoing trade conflict between the US and China , or simply eager not to miss out on the latest surge in the precious metal, is encountering limited supply. This situation is exacerbating the trend. Should some of these risks subside, a short-term pullback could follow. However, we believe that more fundamental changes in international relations should support the price of gold. We maintain our 12-month target of USD 4,600 per ounce.

Although the precious metal has also experienced periods of high volatility, these fluctuations do not call into question its long-term trajectory or the strength of its fundamentals.

The surge in gold prices, however, reflects a deeper geopolitical reorganization, in which precious metals and other commodities play a significant role. Emerging economies—led by China, Russia, India, Brazil, and South Africa—are asserting their own interests and improving their energy, food, and health security. Accelerated by President Trump’s trade policies, their dependence on developed markets is being reduced. Alternative financial settlement systems and new logistics corridors are emerging. This reorganization includes a trend among emerging market central banks to increase their gold reserves, at the expense of US dollar-denominated assets. As producers and refiners of essential and potentially scarce commodities, emerging economies are gaining influence in the global balance of power.

As US policies reshape trade flows and the importance of multilateral institutions diminishes in favor of new regional institutions, investors should assess the implications for their portfolios.

Overhaul of international relations

At the same time, the influence of post-World War II multilateral organizations is waning. Signs of US disengagement from multilateral institutions and obligations—from the Paris Agreement to the United Nations—and reduced funding are causing sclerosis within existing organizations, inevitably leading to either reforms or new platforms for cooperation. In both cases, emerging markets are claiming increasing influence. This shift in dynamics is already having an impact. Meetings of the International Monetary Fund in Washington still see strong multilateral participation, while the number of influential participants at the World Economic Forum in Davos has declined. BRICS+—an organization of developing nations now comprising ten countries (Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates)—is the primary platform for the Global South. Other regional cooperation platforms are added to the list, as illustrated by the Asia-Pacific economic cooperation, the Capital Markets Forum organized by the holders of the Saudi Stock Exchange, the Global Leaders Meeting on Women in Beijing and the meetings of the Commonwealth of Independent States in Central Asia, to name just a few.

Rebalancing trade: consumers of the old world and producers of the new world

Chinese Premier Li Qiang’s announcement on the sidelines of the United Nations General Assembly in New York that his country will no longer seek access to the special and differential treatment provided for in WTO agreements is significant. China’s status as the world’s leading producer and its technological advances in high-value-added sectors make it a preferred source of goods not only for emerging markets, of which it is the main trading partner, but also for developed economies. China’s dominance in essential raw materials, such as rare earth elements, gives it a new advantage in trade negotiations with the United States and internationally. The American consumer remains the primary source of global demand. However, as a global producer, China enjoys increasing power.

The American consumer remains the primary source of global demand. However, as a global producer, China enjoys increasing power.

This backdrop is reshaping trade routes and supply chains. New trade routes are fostering the development of South-South trade. The International North-South Transport Corridor (INSTC), a multimodal network combining maritime, rail, and road transport, connects ports such as Mumbai in India and Bandar Abbas in Iran to Russian rail networks via the vital Rasht-Astara railway line. New Arctic maritime traffic, made possible by Russia’s fleet of nuclear-powered icebreakers, is also considered strategic for countries like India.

An alternative financial settlement system and technologies

Financial security and autonomy are crucial for emerging economies. In recent years, the BRIC countries have accelerated the development of a new settlement system enabling cross-border payments in local currencies. This system relies on new technologies such as distributed ledgers and a new monetary infrastructure linking the central banks of emerging markets through bilateral swap lines. These efforts are not aimed at creating a common currency or adopting the Chinese yuan as an alternative to the US dollar, but rather at affordable, reliable, and efficient financial settlements that facilitate South-South trade.

Nuclear deterrence

In a world dominated by regional superpowers and lacking mutual security agreements, nuclear deterrence plays a crucial role in strategic competition. Increased military spending in developed countries’ budgets has led to a surge in defense investment. However, their governments have limited budgetary leeway for these costly and inefficient military purchases. Should the urgency of defense spending persist, Western companies could face nationalization or direct state intervention to control prices. Indeed, the Western defense industry could face production capacity constraints, which, in turn, would cause prices to soar in the short term. In the short term, these pressures boost profitability and stock prices, as we saw in 2025. However, in the long term, states could impose a cap on defense spending. Nuclear deterrence, and therefore enrichment programs for civilian and potentially military purposes, offer them a more attractive option. The nuclear industry could experience a resurgence in the West, while emerging countries would continue to develop new nuclear capabilities.

It is important to emphasize, however, that these efforts to invest in a more robust defense have implications that extend beyond purely military aspects. The pandemic and the Trump administration’s “America First” strategy highlighted the need to complement Western economies’ military spending plans with broader investments. These programs encompass industrial production, logistics, digital infrastructure, and technologies, from raw materials to semiconductors. These infrastructure investments will have long-term repercussions for economic growth and productivity.

Sustained demand for raw materials is benefiting emerging assets.

In this context, demand for precious and industrial metals and rare earths is increasing. Rare earths and their refining technology, at the heart of the AI ​​value chain, are dominated by China, which is already using them to assert its commercial power vis-à-vis the United States. Furthermore, an alternative financial settlement system could require emerging market central banks to hold larger gold reserves to guarantee the use of bilateral swap lines that provide liquidity in local currencies, a prerequisite for settling bilateral trade. Global central bank gold reserves, representing 18% of total assets, are equivalent to half their pre-Bretton Woods level. Purchases by emerging market central banks could significantly increase global demand and structurally support gold prices and the countries that produce the precious metal.

An alternative financial settlement system could require emerging market central banks to hold larger gold reserves.

Uranium, a chemical element at the heart of the nuclear enrichment value chain, could face increased demand. While there are many uranium producers worldwide, uranium refining technology is dominated by Russia.

Sustained demand for energy commodities, including oil, gas and solar power, is expected to provide utilities and emerging energy producers, as well as companies that have contributed to China’s dominance in the solar energy sector, with sustainable revenue streams in a technology-driven and energy-hungry world.

For asset allocators, these global shifts suggest a sustained boom in emerging market assets and a significant revaluation of their valuations over time. Thanks to their demographic advantages and economic size, many emerging countries will assert their growing influence on the global economy and financial markets. We hold gold in our strategic asset allocations and, from a tactical perspective, we recently increased our exposures to overweight levels. We are maintaining our overweight positions in emerging market equities and emerging market hard currency debt. Next month, we will review all of our exposures and weightings during our 2025 annual review of our strategic asset allocation.