Investors have turned to gold exchange traded funds as a safe-haven play in times of market stress. However, the precious metal may not always act as a hedge against stock volatility.

Over the past five years, the correlation between the SPDR Gold Shares (NYSEArca: GLD) and the CBOE Volatility Index, or VIX, has been mildly negative, reports Alex Rosenberg for CNBC. GLD and VIX have exhibited a -0.02 correlation in the past five years, or almost no relationship.

The VIX, or so-called fear index, is a widely observed indicator for investor sentiment in the stock market and measures the expected or implied volatility of large-cap stock options traded on the S&P 500 index. VIX futures allow investors to profit during rising volatility or hedge against short-term turns.

Since the S&P 500’s low on February 11, equity market volatility dissipated, as reflected by the VIX. The VIX traded at a high of 30.9 on February 11 but hovered near 15.2 on Friday, plunging over 50% in two months. The VIX-related iPath S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) fell 36.3% and ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY) declined 36.5% over the same period.

Meanwhile, GLD has remained relatively unchanged since its February 11 close.

Alternatively, the U.S. dollar may be a better indicator of where the gold prices are heading. Over the past five years, GLD and the dollar index, which follows the greenback against a basket of major developed currencies, has exhibited a correlation of -0.37%, or a falling dollar would reasonably correspond with rising gold bullion.

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