Gold, a portfolio diversifier and hedge, suffered an ugly second quarter, but investors should think twice before planning to jettison the precious metal from their portfolios. Gold futures shed more than 13% in the second quarter – the worst since 2013. The precious metal is typically thought of as a safe-haven asset for investors, but it has seen its share of turbulence amid heightened geopolitical tensions.
For starters, gold futures have fallen 21% since the start of the Iran war. That comes after gold prices touched record highs early in the year. Gold futures also tumbled 0.2% during Wednesday's trading as oil prices rose and the Middle East conflict worsened.
On that day, the S & P 500 dropped about 0.5%.
While the action is enough to raise worries that gold's hedging ability is losing its shine, investors may want to rethink their expectations for the precious metal, as well as its place in their portfolio. "The hedging role is there, but it's probably a little more inconsistent than you would think," said Roger Aliaga-Diaz, Vanguard's global head of portfolio construction.
