The bank sets out its asset allocation thinking, and notably refers to the age-old practice of holding the yellow metal as a way of hedging against inflation.

Economic growth will be a more important driver of how assets such as equities fare over the next 12 months as inflation pressures ease off, Standard Chartered predicts. Nevertheless, the UK-listed bank’s wealth management chief investment office says that there is a case for holding gold in portfolios for inflation protection.

The lender said that it prefers to hold equities over bonds and cash.

"Rising growth has been more important historically for equities’ outperformance rather than whether inflation was rising or falling. This implies that, outside of a scenario of decelerating growth combined with very high and rising inflation, equities can be expected to outperform while economic and earnings growth remain strong,” the bank said in a note.

The bank, which prefers to hold US and eurozone equities, is more or less neutral on UK and Japanese stocks. 

“Our preference for US and euro area equities remains unchanged. However, UK equities face additional headwinds from an increasingly hawkish Bank of England, new Brexit-related disputes and calls for new mobility restrictions amid a resurgence in COVID-19 cases,” the bank said. 

As far as emerging market stocks are concerned, Standard Chartered said that it is looking at “turnaround” forces such as rollout of vaccinations, emerging markets narrowing their growth gap against developed markets, weakness of the US dollar and a significant easing of Chinese monetary policy.

Within the fixed income space, the bank is negative on developed countries’ government high-quality debt, and developed investment-grade corporate bonds. On the positive side, it is constructive on developed market high-yield corporate debt and emerging market US dollar debt.