Gold has the interesting property of projection - it projects the hopes and desires of investors at a specific time. It can be an inflation hedge; then again it may not. It can be a hedge against uncertainty and geopolitical risk; then again it may not. It can respond to negative real rates, but now it is not the case. Gold should have been one of the great hedge investments for a pandemic and for a period it was until the end of summer 2020. Since then, it has been sinkhole for those fearing inflation and uncertainty.
Despite higher inflation, the dollar has still been attractive. Despite volatility, crypto has been an asset class of inflation hedge interest. Despite low real rates, fixed income has still seen capital flows. For equities, the allure of technology has outshined gold. Gold does not have a compelling fundamental story. Hence, the current rangebound behavior.
Can the gold story change? Of course, investors will project again their views on this metal, but there is no clarity on when or how this will occur.
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