Gold remains a cornerstone of portfolio stability, particularly as major central banks implement rate cuts globally. It is an essential tool for safeguarding portfolios against fluctuations in bonds and equities.
With its low correlation to other asset classes, gold is a powerful tool for reducing overall portfolio volatility. Its ability to enhance diversification[1] can improve risk-adjusted returns in a multi-asset portfolio.
Additionally, gold’s safe-haven status is often reinforced during periods of heightened geopolitical risk, making it a valuable asset in uncertain times. Political developments, such as fiscal expansion or geopolitical tensions, may further stoke demand for gold. In particular, fiscal profligacy on the part of governments and excessive public debt could boost the appeal of gold as a store of value in the long term.
