Gold continues to serve as a stabilizing force within a well-diversified investment portfolio, according to Indrani De of FTSE Russell

Gold’s Role in Portfolios Remains Steady Amid Market Turbulence

Although gold has recently experienced significant price swings and has not attracted the typical safe-haven demand during times of increased geopolitical tension, its fundamental position within investment portfolios remains unchanged, according to a leading market expert.

Indrani De, who heads Global Investment Research at FTSE Russell, shared with Kitco News that the latest movements in gold prices are the result of various macroeconomic forces clashing, which is reshaping how investors approach the precious metal in the near term.

De emphasized that while gold continues to draw support from global uncertainty, investors should distinguish between the metal’s enduring fundamentals and the temporary factors influencing its price.

She noted that gold’s traditional safe-haven status is currently being challenged by the increasing expense of holding assets that do not generate income. Ongoing unrest in the Middle East has disrupted oil supplies, causing energy prices to climb and reigniting concerns about inflation.

These inflation worries are fueling expectations that central banks may need to hike interest rates, which raises the opportunity cost for those choosing to invest in gold rather than higher-yielding alternatives.

“Gold doesn’t provide regular income, so the cost of holding it has shifted considerably,” De explained.

Additionally, gold’s surge earlier this year to a record high of $5,600 has led to more pronounced profit-taking and made the metal more reactive to overall market liquidity, especially when investors are inclined to hold cash.

Despite some investors’ disappointment with gold’s recent performance, De pointed out that its decline has mirrored the broader downturn in global equities, highlighting that gold’s movement is part of a larger adjustment across various asset classes.

Even with these short-term changes, De maintains that gold remains a valuable tool for diversification and can still serve as a reliable safe-haven asset when needed.

Stagflation Concerns and the Evolving Role of Commodities

De observed that markets are increasingly reflecting a “stagflationary” scenario, where economic growth slows but inflation persists. In such an environment, real assets like gold often become more significant within portfolios.

While it is too soon to confirm stagflation, De pointed to rising oil prices as evidence of inflationary pressures and falling copper prices as a sign of slowing growth.

“Commodity markets are clearly signaling stagflation risks,” she said. “When economic uncertainty rises, the benefits of diversification become even more important.”

Gold and Other Commodities in a Shifting Landscape

In today’s uncertain climate, De believes gold continues to serve as a defensive asset, but it is no longer the sole option for investors seeking protection. She highlighted that other commodities, such as energy and industrial metals, are more directly influenced by inflation and economic growth trends.

While De did not provide specific investment recommendations, she stressed that the case for including gold and a broader range of commodities in portfolios has only grown stronger as uncertainty increases and economic outcomes become more varied.

Looking ahead, De pointed out that the global shift toward artificial intelligence and clean energy is driving ongoing demand for certain resources, especially industrial and transition metals.

“Commodities that are essential to the AI revolution or the green energy transition are likely to continue benefiting from strong demand,” she concluded.