WGC: Gold Held Up Well in the Face of Geopolitical Risks So Far This Year

SEATTLE (Scrap Monster): In a recent research, the World Gold Council (WGC) emphasized the critical role that gold plays as a hedge against abrupt and erratic geopolitical risks, which frequently result in financial instability.

Global investors' main concern these days is geopolitical risks, say Ray Jia, Research Head, China, and Marissa Salim, Senior Research Lead, APAC. Historical data analysis indicates that selloffs in the equities market are frequently triggered by growing geopolitical worries. The fact that there is a negative association between global market returns and the Geopolitical Risk Index (GPR) indicates this.

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According to WGC, gold has so far this year held up well in the face of geopolitical uncertainties. During these increases, the weekly return on the yellow metal was 1.6%. Geopolitical concerns have also contributed 4.3% of this year's gold return thus far. The role of gold as a hedge against unpredictable geopolitical shocks is further evident from the fact that the concerns over geopolitical risks have been a major driver of gold purchase decisions by global central banks.

Investors would greatly benefit from gold's safe-haven status, long-term return potential, and minimal correlation with risky assets, according to the WGC research.