Gold has typically been used to hedge against inflation or maintain a store of value in times of depreciating currencies. However, the precious metal is turning into a bet on fear, and gold analysts warn that gold prices could turn lower as fear subsides.
“Gold goes up as an insurance policy and then it is sold at a loss when people no longer want insurance,” Rhona O’Connell, head of metals research and forecasts at Thomson Reuters GFMS, said in a Wall Street Journal article.
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Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own shares of GLD.