The shifting investment landscape driven by low interest rates have diminished the opportunity costs of gold.
On a relative basis, gold may look attractive in an environment of negative yielding debt and elevated equities valuations.
Lower return expectations of traditional fixed income and equity solutions may see gold take on a more prominent role in portfolios.
This post was written with contributions from the SPDR Gold Strategy Team: Maxwell Gold, CFA (Head of Gold Strategy), Diego Andrade (Senior Gold Strategist), Robin Tsui (APAC Gold Strategist).
With the gold price up 18% year to date,1 there’s no shortage of headlines earmarking its positive performance to geopolitics, the Federal Reserve (Fed), or growing recessionary fears—to name just a few catalysts floated. In actuality, there is a confluence of short-term and long-term macroeconomic drivers working together that influence gold’s fundamentals (both cyclical and counter-cyclical sectors) which in turn impact the gold price (see Chart 1).