Gold Popped Up as Key Portfolio Hedging Strategy in H1 2020

SEATTLE (Scrap Monster): The Mid-Year Outlook 2020 report published by the World Gold Council (WGC) says that gold was embraced by investors as a key portfolio hedging strategy in the initial half of the year. Looking ahead, gold is likely to witness slower recovery from Covid-19 impacts and is likely to be affected by potential setbacks from additional waves of infections.

The WGC report said that gold witnessed a remarkable performance in H1 2020, with prices surging higher by almost 17% in dollar terms. The gold price in all other major currencies too hit record or near-record highs. It significantly outperformed all other major asset classes. The investors found refuge in gold as a means to reduce portfolio risk. The yellow metal gained recognition as a hedge, as was obvious from the record inflows to gold-backed ETFs during the initial six-month period of the year.

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Historically, investment demand has offset weakness in consumer demand during period of financial stress. Also, it has so far protected investors against extreme inflation. The Council believes that 2020 will be no exception. However, the performance of gold during the rest of the year will depend on the speed and shape of the recovery.