Wall Street says enough is enough. Gold is already too expensive, and it is better to invest capital outside the USA

Gold is breaking new records, pushing the USD 4,600 barrier, but skepticism is growing on Wall Street. Legendary investor Mark Mobius warns that the precious metal has become too expensive, and the unpredictability of Washington's policy and pressure on the Fed are encouraging the largest investment companies, such as Pimco and Citigroup, to diversify beyond the US market. Capital is flowing more and more towards Europe and emerging markets, where experts see a chance for double-digit rates of return.

Mark Mobius: This is no longer a price at which I would buy gold

Gold rose 64% last year and continues its rally this year, trying to settle above $4,600 an ounce. Commodity market participants expect further appreciation due to continuing geopolitical tensions, further Fed interest rate cuts and central bank purchases. For example, UBS bank analysts predict a price of $5,000 in the coming months.

However, markets veteran Mark Mobius remains skeptical. He believes that after such rapid increases, the precious metal has lost its investment attractiveness.

“I certainly wouldn't buy gold at this price,” Mobius said in an interview with Bloomberg.

The expert admitted that he would only become interested in the metal if the price was 20% lower. In his opinion, the rally is threatened by a potential strengthening of the dollar and improvement in the American economy.

Instead of gold, Mobius prefers to invest in shares from China, India, South Korea and Taiwan. – China's goal now is to surpass the US in microprocessor technologies and artificial intelligence. Investors' money flows in this direction, not towards consumption, Mobius argues.

He also particularly values ​​shares from India, arguing that the country's government is trying to increase consumption and investment, especially in technology.

Pimco: We need to diversify our portfolio away from the US

The unpredictability of Donald Trump's policy forces the investment giant Pimco to limit its exposure to the American market. The company managing assets worth USD 2.2 trillion is trying to limit the risk resulting from sudden decisions of the administration, which cause high volatility.

– You should be aware that we are dealing with an administration that is quite unpredictable. What do we do about it? We are diversifying, said Dan Ivascyn, chief investment officer at Pimco, in an interview with the Financial Times.

And this is not just a temporary solution. “In fact, we believe we are in a multi-year process of gradually moving away from US assets,” he added.

Wall Street professionals were prompted to speak more loudly about the need to look for investment opportunities outside the US due to renewed attacks on the Fed's independence. Earlier this week, Jerome Powell, the head of the central bank, announced that the Justice Department had opened an investigation against him regarding the $2.5 billion renovation of the Federal Reserve headquarters.

Citigroup: Investors are betting more and more boldly on Europe

According to Citigroup strategists, this year investors will diversify their portfolios more strongly at the expense of American shares, which should translate into a 10% increase in the global stock index. This forecast is based on the assumption that the dynamics of profits of companies from the rest of the world will catch up with the results of companies from the USA. The driving forces behind these changes are government spending in Europe, stimuli stimulating the Japanese economy and the increasing use of artificial intelligence around the world.

“Investors are becoming more confident about international stocks, and their portfolios are more optimistic about foreign markets than the US. Risk appetite now has a much broader geographic reach than a year ago,” wrote Citigroup analysts led by strategist Beata Manthey.

Manthey was one of the few people on Wall Street who correctly predicted positive prospects for the European stock exchange more than a year ago and recommended increasing the share of shares from this region in portfolios. Over the last twelve months, the STOXX 600, a regional index of European shares, has gained approximately 17%. Taking into account the depreciation of the dollar, this result allowed it to overtake the American S&P 500 index, which nominally recorded a similar rate of return.

According to Citigroup strategists, the retreat from American assets will help the global stock index continue to climb. Experts have set a target level for the MSCI All-Country World Index at the end of the year at 1,360 points, which assumes an increase of approximately 10% compared to current valuations.

BlackRock: Company results will fuel further increases on the Old Continent

Investment strategists from BlackRock believe that the rally on European stock exchanges, despite reaching record levels, still has the potential to continue. The basis for this optimism are the solid earnings prospects of companies from the region.

The world's largest asset manager expects European shares to increase in price by another 8-9% this year, mainly due to the banking sector and companies related to the artificial intelligence industry.

“If corporate earnings this season meet expectations, stocks still have upside potential, even at current high valuations,” Helen Jewell, BlackRock's chief global investment officer, pointed out in a note to clients.

“The optimism regarding profits is largely related to the AI ​​sector and related areas: energy efficiency and sustainable energy,” she added.

It is worth noting that while in 2025 the profits of companies from the STOXX 600 index were stagnant, this year analysts polled by Bloomberg expect their clear rebound by approximately 11%.

Deutsche Bank: Defense sector near valuation peak

The forecasts of Citigroup and BlackRock contrast with the concerns of some investors about overheating of European stock exchanges after a wave of strong growth. Although, at a valuation of 15 times annual earnings, shares in Europe are noticeably cheaper than those in the US, valued at over 22 times, they are historically expensive. The relative strength index (RSI) is also a cause for concern, as it approached the level of 80 points – a value recorded only a few times in the last two decades, which clearly indicates that the market is overbought.

The defense sector is extremely hot. Only since the beginning of this year, shares of defense companies have increased in price by approximately 20%, which is the result of growing defense budgets in Europe and American ambitions regarding Greenland. According to Deutsche Bank analysts, valuations in this segment have probably already reached their peak. The rally could halt a potential peace deal in Ukraine and widening differences in defense spending between the countries.

“Further increases are unlikely due to ambiguous geopolitical factors. Regional differences in defense spending are likely to persist, which will negatively impact the valuations of companies from France and Great Britain compared to their German competitors,” Deutsche Bank analysts wrote.

Germany's ambitions to create the strongest army in Europe make it a spending leader, while political instability in France calls its budget into question and London's plans remain unclear. For this reason, Deutsche Bank lowered recommendations for the French company Thales, the British BAE Systems and the Italian Leonardo from “buy” to “hold”. At the same time, the bank's analysts are more optimistic about companies such as Airbus, Safran, MTU Aero Engines and Rheinmetall.

Bank of America: The recovery in the real estate market is becoming a fact

Bank of America analysts' forecasts are very optimistic regarding companies from the European real estate sector, which they believe may soon record rates of return not seen in decades. Experts expect that over the next 12 months the return on investments in this segment will amount to 19%, including 5% paid in the form of dividends.

The optimistic forecast is based on the stabilization of interest rates in the region, low asset valuations and growing investor risk appetite. It was also noted that the return on equity in the European real estate sector has already returned to the median of the last 20 years.

“The revival is really taking place,” say the bank's analysts, emphasizing that the profits of companies in this sector are returning to historical averages as the occupancy rate improves.

The Euro Stoxx Real Estate index gained less than 6% last year, clearly lagging behind the broad STOXX 600 index, which grew by about 17%. The real estate sector index is still a third below levels from four years ago, when central banks began a cycle of interest rate increases. Bank of America lists data centers, warehousing, healthcare and retail as some of its interesting real estate topics.