The price of gold is one of the most important factors for investors. Gold is seen as an asset of choice during times of instability, and as a safe-haven asset when traditional markets falter. So, as Smiths analyst Joe Cavatoni points out, it’s no surprise that gold has attracted many intrepid investors during the past few years as uncertainty has engulfed the world.
However, the metals expert isn’t convinced that the bull run in gold will last forever. Cavatoni cites new political and economic uncertainty, including heightened trade tensions between the US and China, which have brought some headwinds to gold investments.
Furthermore, Cavatoni notes that rising interest rates will also affect gold prices negatively. He believes that when it comes to gold, investors should be keenly aware that volatility is certain to continue in the months ahead.
Still, Cavatoni hasn’t written off gold entirely, saying that it is still seen as a key asset for many investors. Gold remains a hedge against a number of uncertainties and risks, and as long as these remain present in the markets, it will continue to attract investors.
Additionally, Cavatoni makes the point that there are some emerging opportunities in gold mining stocks, if investors are willing to take the risk. He explains that these stocks could benefit from strengthened gold prices, although investors should maintain realistic expectations when it comes to their returns.
In the final analysis, the Smiths analyst recommends that gold should still remain a specific component of portfolios for investors, albeit as a smaller part. Gold has a long-standing reputation as a safe, reliable asset when it comes to market volatility, and Cavatoni says that status shouldn’t change anytime soon.