As markets sway, safe havens shine. Except gold
GLD•Market volatility has lifted demand for Treasuries, the dollar, the Swiss franc and the yen, but gold has fallen below $4,000 an ounce and is down 9% this year. Central-bank gold purchases rose 42% in the third quarter to 321 metric tons, while bullion’s correlation with the S&P 500 has strengthened.
1. Gold loses safe-haven appeal
Concerns about the stability and profitability of the AI boom have pushed investors toward traditional havens as the S&P 500 and Nasdaq retreat from record highs. Gold, however, fell below $4,000 an ounce on Friday, its lowest level in a year, despite falling stock prices, widening credit spreads and lower bond yields.
2. Central banks keep buying
Central-bank gold purchases rose 42% in the third quarter to 321 metric tons, the highest quarterly total since the fourth quarter of 2024, with Poland and China leading officially reported buying. The article notes an IMF paper found bullion was not a reliable hedge against equity-market volatility. Gold’s positive correlation with the S&P 500 is estimated at 0.48 on a three-month basis and 0.69 on a one-month basis.
3. Weak performance this year
Gold has lost around a quarter of its value since the United States and Israel first attacked Iran on February 28, and is down 9% year to date, the worst performance among 14 major asset classes in Bank of America’s ranking. It is trading about 10% below its 200-day moving average. Analysts cited in the article say that if stock-market losses create a need for liquidity, investors may sell gold rather than buy it.
