Can Gold Help Weather a Downturn? Maybe

Clients might want a bit of that Midas touch after last week.

Gold is one of the most precious metals on Earth, but given the volatile financial markets as of late, element No. 79 on the Periodic Table is looking even more appealing. The sweeping tariffs that were announced by the US on April 2 rocked equity markets and left many clients feeling a bit uneasy about their portfolios. But gold hit an all time high of more than $3,100 per ounce last week.

With higher prices on everything from cars and coffee to beer and bananas on the horizon, gold can add some diversification, said Joy Yang, head of index product management and marketing at MarketVector. “Gold is always a good place to be if investors are looking for a store of value over the long term, but it shouldn’t be 100% of your core holdings,” she told Advisor Upside. 

The Golden Rule

The latest trade policy, which calls for a base tariff of at least 10% on most goods entering the US, certainly spooked investors. “The market’s immediate reaction was a widespread shift into defensive mode, with capital flowing out of equities and risk assets and into gold,” Linh Tran, XS.com market analyst, said in a note.

So far this year, all three major equity indexes are down, and the S&P 500 and the Nasdaq recently experienced their worst quarters since 2022. Gold’s rise, however, can soothe some of the portfolio pain for investors: 

• The spot price of the precious metal was up more than 14% year-to-date, and the spot price of silver was up more than 3% this year by the time equity markets closed Monday.
• SPDR Gold Shares ETF took in nearly $6 billion in assets during the first quarter, according to etf.com.

“As policy risks become increasingly unpredictable, the precious metal is naturally reclaiming its role as the preferred safe haven,” Tran said, adding that gold is likely to continue attracting capital and potentially reach higher prices in the near term.