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Investing.com -- Macquarie analysts said that the current market dynamic reflects a widening divide between optimism about artificial intelligence and caution over global political and economic risks.
In their latest Market Pulse note, the firm wrote, “Optimists buy tech, pessimists buy gold, hedgers buy both.”
Macquarie described the parallel rallies in AI-driven equities and gold as “paradoxical,” noting that “a hope-based AI-tech rally [is taking place] simultaneously with a rally in gold.”
The firm said that “gold’s rally is the collective ‘hedge’ against the prospective failure of the U.S.’s AI-driven tech boom to deliver on its high-productivity, high-growth promises, or to justify the vast investment needed to support those promises.”
It added that a collapse of this optimistic vision “might trigger an inflationary resolution for the world’s sovereign debt overhang, rather than a productivity-based resolution.”
The analysts said financial markets remain uneasy amid uncertainty around monetary policy and political risks in Europe.
“Stocks and FX are finding it hard to mount gains today,” they wrote, pointing to concerns over “France,” where a new legislative or an early presidential election “won’t relieve downward pressure on the EUR, even if it eventually solves the problem of ‘governability.’”
Macquarie said such an outcome “could give more power to the populist extremes” and hinder fiscal consolidation efforts.
The note also cited doubts about aggressive Federal Reserve easing, saying, “The case for monetary policy being overly restrictive still looks rather flimsy,” while “inflation has not receded yet, and that remains the true elephant in the FOMC conference room.”
Despite political uncertainty and cautious central bank rhetoric, Macquarie said investors are balancing faith in technological growth with the need for hedges against its potential failure.