• Investing
  • Stock
  • Economy
  • Editor’s Pick
Portfolio Performance Today
Stock

Why gold shines as a portfolio diversifier?

by June 24, 2025
by June 24, 2025

Middle East geopolitical uncertainty has significantly escalated.

This follows a US missile attack on Iranian nuclear facilities, which Iran retaliated against with a missile attack on an American airbase in Qatar late on Monday.

Meanwhile, gold prices have struggled to hold above $3,400 an ounce, indicating that the metal is not attracting a significant safe-haven bid.

Safe-haven demand for gold has been constrained, with some analysts attributing this to the conflict remaining localized. Similarly, oil prices are struggling to maintain gains despite the ongoing instability.

“Gold’s inability to hold early gains could suggest that traders don’t expect hostilities to escalate further,” said David Morrison, senior market analyst at Trade Nation. 

Alternatively, it could simply be profit-taking in an otherwise well-supported market. More broadly, prices continue to consolidate, and are currently little more than 4% below April’s record high of $3,500.

Gold in diversified portfolio

Market analysts at UBS highlight gold’s value within a diversified portfolio, emphasising that its strength is not primarily as a hedge against geopolitical events, despite its lackluster performance as a safe haven, Kitco.con said in a report.

“Investors, though, might benefit from thinking about gold from the perspective of portfolio diversification, rather than as a discrete trade that hinges on the price level,” Julian Wee, Investment Writer at UBS was quoted in the report.

Wee highlighted that portfolio managers see gold as a versatile asset, citing data from the World Gold Council’s Annual Central Bank Gold Survey. 

The survey indicated that the primary reasons for holding gold are its ability to perform well during uncertain times, its effectiveness as a diversification tool, and its role as a reliable store of value.

Wee said:

The current geostrategic environment supports all these factors, albeit to varying degrees. The Trump administration’s unpredictable policy-making contributes to an erosion of confidence, which may remain a key driver in the near term. Investors should be mindful of the indicators pointing to a sustained move out of the USD, and gold is likely to play a crucial role in this transition.

Bullish outlook remains

UBS maintains a bullish outlook on gold, reiterating its $3,800 per ounce upside target despite the yellow metal’s current sideways trading pattern.

Wee further stated, “We anticipate continued strong demand from central banks and ETFs. Gold also functions as a politically neutral, liquid store of value, replacing the USD in this regard.”

However, Wee highlighted alternative avenues for investors to leverage gold’s value, even amidst price consolidation. 

He proposed exploring corporate debt from gold miners, with some bonds offering yields of approximately 6%.

Despite record-high gold prices, the mining sector has struggled to attract consistent investor interest.

However, producers have maintained significant margins in recent years due to stable production costs.

Wee noted that these companies have successfully reduced net leverage and bolstered their balance sheets, thanks to robust free cash flow generation.

We expect M&A activity to continue in a lower-risk manner, helping preserve the strength of their financial metrics.

The post Why gold shines as a portfolio diversifier? appeared first on Invezz

0 comment
0
FacebookTwitterPinterestEmail

previous post
Starbucks denies plans to fully exit China operations amid rising local competition
next post
Top Hang Seng Tech Index stocks gainers in 2025 revealed

Related Posts

Asian markets open: Nikkei hits another record high,...

October 7, 2025

Top reasons why the Topix and Nikkei 225...

October 7, 2025

Goldman Sachs boosts 2026 gold price forecast to...

October 7, 2025

Beijing intensifies oil stockpiling amid global supply and...

October 7, 2025

Trump’s new 25% truck tariff targets imports from...

October 7, 2025

CAC 40 Index outlook: Understanding the decline and...

October 7, 2025

DAX Index analysis: Why German stocks are rising...

October 7, 2025

Europe markets open: Stoxx 600 flat, CAC 40...

October 7, 2025

LG India’s $1.3B share sale highlights record IPO...

October 7, 2025

Trilogy Metals shares soar over 200% as White...

October 7, 2025

Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.

By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

Recent Posts

  • The OECD’s Warning to America: Economic Growth Is Slipping

    October 7, 2025
  • Semiconductor Giants with Tech-Industrial Ambitions

    October 7, 2025
  • Will Bitcoin Strengthen or Weaken US Dollar Dominance?

    October 7, 2025
  • Asian markets open: Nikkei hits another record high, Sensex up 140 pts

    October 7, 2025
  • Top reasons why the Topix and Nikkei 225 indices are soaring

    October 7, 2025
  • Goldman Sachs boosts 2026 gold price forecast to $4,900 amid strong demand

    October 7, 2025

Editors’ Picks

  • 1

    Meta executives eligible for 200% salary bonus under new pay structure

    February 21, 2025
  • 2

    Walmart earnings preview: What to expect before Thursday’s opening bell

    February 20, 2025
  • 3

    New FBI leader Kash Patel tapped to run ATF as acting director

    February 23, 2025
  • 4

    Cramer reveals a sub-sector of technology that can withstand Trump tariffs

    March 1, 2025
  • 5

    Anthropic’s newly released Claude 3.7 Sonnet can ‘think’ as long as the user wants before giving an answer

    February 25, 2025
  • 6

    Nvidia’s investment in SoundHound wasn’t all that significant after all

    March 1, 2025
  • 7

    Pop Mart reports 188% profit surge, plans aggressive global expansion

    March 26, 2025

Categories

  • Economy (2,804)
  • Editor's Pick (280)
  • Investing (185)
  • Stock (1,914)
  • About us
  • Contact us
  • Privacy Policy
  • Terms & Conditions

Copyright © 2025 Portfolioperformancetoday.com All Rights Reserved.

Portfolio Performance Today
  • Investing
  • Stock
  • Economy
  • Editor’s Pick
Portfolio Performance Today
  • Investing
  • Stock
  • Economy
  • Editor’s Pick
Copyright © 2025 Portfolioperformancetoday.com All Rights Reserved.

Read alsox

European stocks rise as trade tension jitters...

April 8, 2025

Pharma giant AstraZeneca eyes NYSE listing overhaul,...

September 29, 2025

US stock plunge as jobs data disappoints...

August 2, 2025