Should you still hold gold as correlations rise?

Natalie Kenway

Investment managers are beginning to question the value of holding gold for diversification purposes, as its correlation to equity markets soared to 65% this year.

Historically, the precious metal has been the asset class of choice to protect portfolios against downturns in equity and bond markets, and to hedge against inflation. While this worked in investors' favour throughout downturns in the past, more recently, gold is moving more in line with other markets. According to Morningstar data, the long-term correlation of the SPDR Gold ETF to the S&P 500 has historically been 0.11%, and this fell to 0.02% during the credit crunch. During the bull run of 2009 to 2011 it moved into negative territory and was -0.13%. However, since 2011 it has i...

To continue reading this article...

Join Investment Week

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now


Already an Investment Week


More on Commodities

European-focused investment grade and high yield credit have highest inflows since April 2020.

Fixed income dominates ETF flows in July

Accounted for $32.5bn

clock 08 August 2022 • 2 min read
David Coombs, head of multi-asset at Rathbones Unit Trust Management

Rathbones' Coombs: Multi-asset funds 'called it right' but unable to combat hardship

Rathbone Multi-Asset Strategic Growth

clock 05 August 2022 • 3 min read
Lee Robinson, founder and CIO, Altana Wealth

Carbon trading: the big long

Time for a different hedge

Lee Robinson
clock 05 August 2022 • 4 min read