On Monday (September 15), Russ Koesterich, Managing Director and Portfolio Manager of the Global Allocation team at BlackRock, the world's largest asset management company, reaffirmed his bullish stance on gold in his latest commentary while providing more detailed supplementation to his views.

In his commentary published at the end of March this year, Koesterich had indicated his optimism about gold as a long-term hedging tool against falling interest rates and currency devaluation. In his latest perspective, he further suggests investors consider gold as a hedge against potential market volatility.

After an unfavorable start at the beginning of the year, the S&P 500 index has recently climbed back to historical highs. Koesterich remains bullish on U.S. stocks, but he warns that as volatility has declined significantly, potential market risks are increasing.

He wrote in his report: "Since May, investors have achieved the best returns from flowing back into U.S. stocks. I still believe the stock market will rise higher by year-end, but we are entering a season where volatility tends to increase. Under these short-term dynamics, I recommend moderately increasing gold allocation in portfolios."

Koesterich suggests investors allocate 2% to 4% of their investment portfolios to gold in the current environment.

"In the short term, one could consider approaching the upper limit of this range. If volatility rises in autumn as it typically does, gold tends to demonstrate stronger performance relative to stocks."

Koesterich pointed out that in this year's context of economic and geopolitical uncertainty, the Chicago Board Options Exchange Volatility Index (VIX, the market's "fear index") has recently fallen below 15 points, reaching its lowest level since February.

He added: "Even a moderate increase in stock market volatility could benefit gold. Looking back over the past 15 years, gold's performance relative to stocks shows a high correlation with weekly or monthly changes in implied volatility. Historical data shows that when volatility increases by 20%, gold averages about 3% weekly outperformance over stocks; in rare cases where volatility spikes by more than 50%, gold's average excess returns even exceed 5%."