Global Matters Weekly – 28 November 2022

Has gold lost its shine?

by Stephen Nguyen, CFA — Portfolio Strategist

— Historically, gold has proven its ability to preserve its purchasing power when compared to fiat money as it cannot be devalued by central banks

As we approach the end of 2022, it is worth reflecting on asset class returns this year. Global equities and bonds have both suffered significant declines and as a result the traditional balanced portfolio, anchored by these two asset classes, has struggled. Risk assets have had a torrid time due to a combination of factors including bleak economic and earnings outlooks, inflation concerns and heightened geopolitical tensions, which have all weighed on investor sentiment. Surprisingly, gold which has traditionally been deemed as a ’safe haven’ asset has also disappointed this year. Gold is often thought of as a hedge during market downturns and in an inflationary environment, so why has it struggled this year? And does it still warrant a place in investors’ portfolios.

Market Snapshot

    • Global equities rallied 1.7% on the week
    • China locked down one-fifth of the country due to a COVID-19 outbreak
    • Brent crude lost 4.6% on the week, down to $83.6 a barrel
    • Gold returned 0.2% on the week to trade at $1754.9 an ounce