Live Markets: In gold, we trust?

Davide Campari Milano NV

07/05/2026 10:36

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IN GOLD, WE TRUST?

Gold has often been seen as a diversifier in times of market stress. When equities fall, gold is meant to be the reliable asset that provides stability.  But that relationship has weakened in recent months.

"Equities and gold have often moved in the same direction, reducing diversification benefits and raising concerns among investors," writes UniCredit investment strategist Thomas Strobel.

"This matters because gold is rarely held for pure return reasons. Its value lies in providing protection and balance, especially during periods of stress."

Strobel believes the underlying structural strength of gold remains intact, believing it should offer diversification over the liquidity cycle and protection in severe stress scenarios.

"Beyond its historical track record, its defensive role is underpinned by fundamental factors, including scarcity, no issuer risk and independence from the financial system, which tend to become particularly valuable when equity volatility rises and liquidity tightens materially," he says.

Gold demand is also likely to be supported by ongoing central bank purchases linked to reserve diversification and geopolitical risk. That should also keep retail demand strong.

"The current episode reflects timing reasons rather than a structural breakdown, with the hedging role temporarily paused rather than broken," Strobel says.

(Samuel Indyk)

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