Gold has also fallen out of favor as inflation remains subdued and Eurozone debt concerns have eased, said James Cordier, president of Liberty Trading Groupin a CNNMoney report. “All the factors that had supported gold are now off the table,” he said.
Despite the price pullback, some analysts maintain that a small allocation to gold still makes sense for diversification purposes for long-term investors.
“Gold’s low correlation to other asset classes suggests that it has the potential to improve the efficiency of portfolios,” said David Mazza, head of ETF investment strategy, Americas, at State Street Global Advisors. [ETF Webcast: Gold Still Has a Role in Portfolios]
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Full disclosure: Tom Lydon’s clients own GLD.