The question comes down to the role within a portfolio - is the allocation there as a form of insurance, or to express a view on the future path of prices?
Gold has glittered amid 2024’s clouded outlook, taking first place among major assets as at the end of July.[1] We can point to several factors that have supported the rally.
First, those clouds: with more than two-fifths of humanity going to the polls, uncertainty was always going to be a feature of 2024, and unexpected twists in India, France and most recently the US have only confirmed the need for constant reassessment of political risk. This is in addition to ongoing conflict in Ukraine and Gaza, underscoring how quickly uneasy peace can turn into outright hostilities…
* It should be noted that diversification is no guarantee against a loss in a declining market.
[1] Source: LGIM, Bloomberg
