AI and gold: Navigating dual investment frontiers in a transformative era: Insights from Jurrien Timmer - October 20, 2025
Fidelity’s Director of Global Macro Jurrien Timmer, shared his insights on the evolving investment landscape shaped by the rise of artificial intelligence (AI) and the enduring appeal of gold as a hedge amid fiscal and geopolitical uncertainties.
Here are some of the key points from his commentary.
The AI boom: A new digital renaissance
Jurrien highlights that AI is driving a technological revolution akin to the internet boom of the 1990s. While AI-related stocks currently have elevated valuations, this reflects a growth phase where innovation is translating into real earnings expansion, especially among major tech companies like the MAG7. These companies demonstrate strong fundamentals with forward price-to-earnings ratios around 35, which could potentially lead to earnings growth.
Gold’s resurgence: A hedge in an uncertain world
Gold is reclaiming its status as a critical hedge amid fiscal dominance and geopolitical shifts. The U.S. government's approach to managing debt through increased spending and low interest rates raises concerns about fiscal sustainability, enhancing gold’s appeal as a store of value. Additionally, the global monetary order is shifting from a unipolar, dollar-centric system to a multipolar one, with China’s rising influence driving strong demand for gold. Gold offers protection against inflation and diversification away from traditional bonds, which face risks from rising deficits and debt levels in countries like Canada and Japan. Gold miners, attractively valued relative to gold prices, provide leveraged exposure to this trend.
Bond market dynamics: Fiscal risks and yield uncertainty
Despite fiscal challenges, the bond market shows some complacency with yields generally between 4% and 5%. However, occasional dips below 4% in the 10-year Treasury yield indicate underlying uncertainty about fiscal sustainability. Rising deficits and debt burdens in developed economies pose risks to bond valuations. Monitoring fiscal policy, interest rates and inflation expectations is critical. As these factors evolve, gold’s role as an alternative store of value and inflation hedge becomes increasingly relevant.
Monetary policy and market sentiment: The Fed’s influence
Monetary policy remains a central driver of market sentiment. The Federal Reserve’s decisions on interest rates and balance sheet management impact inflation expectations, bond yields and the relative attractiveness of equities and gold. The Treasury’s approach to funding deficits, including T-bill issuance and money market fund dynamics, adds complexity. Leadership transitions within the Fed could signal shifts in policy direction. Staying informed about monetary policy developments is essential, as changes in the Fed’s stance can alter risk premiums, affect asset valuations and create opportunities or challenges for both AI-driven growth stocks and gold.
Conclusion: Positioning for a dual-themed market
The current investment landscape is defined by the coexistence of two powerful themes: the transformative potential of AI and the enduring value of gold as a hedge. The AI boom is seen as a new digital revolution, with potential for growth, similar to the internet revolution of the 1990s. Meanwhile, gold's resurgence as a hedge against fiscal and geopolitical uncertainties is crucial, given the U.S.'s fiscal strategies and the shift towards a multipolar global monetary system.
