DoubleLine’s Gundlach cuts gold exposure to 10%, urges investors to rebalance after 'nosebleed' rally

DoubleLine Capital CEO Jeffrey Gundlach has significantly reduced his firm's gold exposure from a previously recommended 25% to 10%, citing the precious metal's recent surge to "nosebleed levels" and the strategic importance of rebalancing. Gundlach, whose firm manages $95 billion, now also holds 5% in a broad commodity index and favors non-U.S. and emerging market equities for their more attractive valuations. This rebalancing follows gold's pullback from over $4,400 to around $3,977, partially influenced by the Federal Reserve's recent 25 basis point rate cut and Chairman Powell's tempered outlook on further easing.

Analysis

Jeffrey Gundlach, CEO of DoubleLine Capital ($95 billion AUM), has significantly reduced his firm's gold exposure from a previously recommended 25% in mid-September to 10%. This strategic rebalancing follows gold's ascent to "nosebleed levels," peaking above $4,400 an ounce before correcting to $3,977. Gundlach emphasizes rebalancing as a powerful tool to trim overextended positions.

Beyond gold, Gundlach now allocates 5% to a broad commodity index. His initial bullish gold stance was partly driven by expectations of persistent inflation due to tariffs, a factor still relevant for commodity exposure. For equities, he expresses a preference for non-U.S. and emerging market stocks, particularly those denominated in local currencies, citing more attractive valuations compared to U.S. markets.

This portfolio adjustment occurs amidst recent monetary policy shifts, with the Federal Reserve implementing its second 25 basis point rate cut in 2025. However, Fed Chair Jerome Powell tempered market expectations for further easing, indicating a December rate cut is not guaranteed. This cautious Fed stance, coupled with gold's recent price action, likely influenced Gundlach's rebalancing decision.

Key Decisions for Investors

• Investors should consider re-evaluating their gold allocations, especially if positions have become overweight following the metal's significant run-up to "nosebleed levels," aligning with Gundlach's rebalancing strategy.
• Given Gundlach's preference for non-U.S. and emerging market equities due to more attractive valuations, investors might investigate opportunities in these regions, particularly local currency-denominated assets.
• Pay close attention to Federal Reserve communications regarding future rate actions and inflation trends, as these macroeconomic factors significantly influence asset allocation decisions, especially for commodities and interest-rate sensitive assets.