PRECIOUS METALS | Capital Economics: Gold Still Valuable as a Hedge Against Stock Market Declines

Capital Economics strategist Thomas Mathews said gold still has value as a hedge against sharp stock market declines. According to Jin10, he said gold has recently behaved more like a risk asset than a safe one, with its recent price volatility comparable to that of the benchmark S&P 500 index. He added that gold's weak performance during the Middle East conflict appeared to weaken its reputation as an inflation hedge, while its link with real bond yields appeared to remain intact. Mathews said any decline in real yields would likely support gold, and that if the U.S. economy is hit and prompts the Federal Reserve to cut policy rates sharply, gold's recent positive correlation with stocks will not continue.