The volatility for the stock market and renewed concerns about economic growth could spur some investors to take a closer look at buying gold. Those who already own it are probably sleeping a little easier this week. With the the stock market now well off its highs, spot gold is actually outperforming stocks and the broader bond market year to date.
What's surprising is that gold has performed so well in a year where the Federal Reserve's benchmark rate is above 5% — typically bad news for the no-yield yellow metal. That could change in gold's favor going forward. "It passed a significant challenge in a high interest rate environment.
Now you know the interest rate environment is going to decline. The economy's weakening. So now this is when gold actually does start to work," said John Davi, CEO and CIO at Astoria Portfolio Advisors.
Bitcoin is still ahead of gold in 2024, likely helped by the arrival of new ETFs, but the so-called "digital gold" has dropped about 14% in August — compared to just a 2% decline for real gold — and has tended to sell-off with other risk assets during times of stress. If the economic picture continues to weaken, gold could pass the leading cryptocurrency to be the top performing major asset of the year. Davi said that his firm typically gets gold exposure through the SPDR Gold MiniShares Trust (GLDM) and the Abrdn Physical Precious Metals Basket Shares ETF (GLTR) .
.