Gold remains an important asset in investment portfolios, especially as macroeconomic uncertainty, geopolitical risks, and de-dollarization trends continue to shape global markets. However, according to FTSE Russell, stronger long-term opportunities in commodities may increasingly come from metals linked to artificial intelligence, electrification, and the global green transition.

Gold Remains an Important Defensive Asset

According to Indrani De, Head of Global Investment Research at FTSE Russell, the core investment case for gold has not changed. Gold continues to be supported by central bank demand, geopolitical uncertainty, and the ongoing diversification away from the U.S. dollar.

However, gold also faces pressure from higher real yields as the U.S. Federal Reserve maintains a cautious monetary policy stance. This leaves gold caught between two opposing forces: safe-haven demand and portfolio protection on one side, and the pressure of higher real interest rates on the other.

As a result, gold still has a place as a strategic asset in portfolios, but its short-term upside potential may remain limited.

AI and the Green Transition Are Creating a New Commodity Cycle

FTSE Russell believes the commodity market is entering a new long-term phase driven by two major structural themes: artificial intelligence and the global energy transition.

The rapid growth of AI is increasing demand for data centers, semiconductors, electrical equipment, and the industrial metals needed to build this infrastructure. FTSE Russell estimates that the five largest U.S. hyperscale cloud providers could spend more than $600 billion on AI infrastructure this year, with annual investment expected to exceed $900 billion by 2028.

This creates significant long-term demand for industrial metals, especially those used in electrification and technology infrastructure.

Energy Security Is Accelerating Clean Energy Investment

Tensions in the Middle East and risks around the Strait of Hormuz have shown that energy is no longer only a matter of oil prices. It has become an issue of economic security.

According to FTSE Russell, countries may continue to rely on fossil fuels in the short term, but over the long run, energy shocks are likely to accelerate investment in renewable energy, electrification, batteries, electric vehicles, and power grids.

The report also notes that global investment in clean energy is now twice as high as investment in fossil fuels. Falling costs for solar panels and batteries have also made electrification more economically attractive.

Copper and Silver Are Gaining More Attention

As AI and the green transition accelerate, industrial metals such as copper and silver are attracting more investor attention.

Copper plays a key role in power grids, electric vehicles, renewable energy, and electrical infrastructure. Silver, meanwhile, has a dual role: it is both a precious metal and an industrial metal, with important uses in solar energy and electronics.

This gives silver an additional long-term demand driver beyond its traditional role as a safe-haven asset.

Environmental Stocks Are Outperforming

These trends are already being reflected in financial markets. According to FTSE Russell, the FTSE Environmental Opportunities Index has outperformed the FTSE All-World Index by around 8.5 percentage points so far this year.

This shows that investor capital is increasingly moving toward companies linked to clean energy, electrification, environmental technology, and green infrastructure.

Conclusion

Gold should still have a place in investment portfolios because of its defensive role, its ability to preserve value, and its appeal during periods of geopolitical uncertainty. However, looking further ahead, the more dynamic growth opportunities in commodities may come from metals connected to AI, clean energy, electrification, and energy security.

Source: Reuters