Gold - the answer to the new norm of market disruption

As a real asset, gold serves as a preferred alternative against fiat currencies. It provides a hedge for monetary and fiscal policies.
As a real asset, gold serves as a preferred alternative against fiat currencies. It provides a hedge for monetary and fiscal policies. PHOTO: BLOOMBERG

Gold has broken out of the range it was in since late 2013. While it retreated after the Group of 20 summit, it is too early to conclude that trade and other disruptions are behind us.

Instead, geopolitical uncertainties and market disruptions are the new norm. At the same time, economic growth looks tepid. Given this backdrop, central banks have embarked on another easing cycle. Gold is an effective hedge and a good component of robust portfolio construction in this environment.

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A version of this article appeared in the print edition of The Straits Times on July 08, 2019, with the headline 'Gold - the answer to the new norm of market disruption'. Print Edition | Subscribe