Gold has surged past $3,000 per ounce, hitting a historic milestone amid rising demand driven by global uncertainty and de-dollarisation trends. Experts attribute this spike to factors such as China’s increased gold holdings and broader concerns over the stability of the US Dollar. 

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As nations move away from the dollar, gold has been perceived as a safe haven, drawing investors looking to protect their wealth. While gold’s status as a secure asset is widely recognised, critics point out that its historical performance as a hedge against economic uncertainty is inconsistent.

For instance, despite its rise during the Gulf War, the Great Recession, and Black Monday in 1987, gold failed to shield investors during the Asian currency crisis or the 2020 pandemic market collapse.

In some periods of economic distress, such as the inflationary period of 2021–2022, gold actually lost value, raising questions about its reliability as an inflation hedge.

Gold surges, but experts warn of risks

Experts say investors should be cautious about investing in gold-related assets, such as gold ETF, which tracks the price of gold but often experiences discrepancies between its market price and net asset value.

Although gold has recently outperformed, some experts are not optimistic that gold can hold its value. Despite these uncertainties, gold continues to be a popular choice during times of market volatility.

Experts say investors should approach gold with caution, understanding both its strengths and limitations in the current market landscape.  As the global financial situation evolves, its appeal as a safe asset may persist, but the risks associated with it should not be overlooked.

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(With inputs from the agencies)