The Role Of Gold In Hedging Equity

Gold yielded the best returns across traditional asset classes in the last quarter of 2024.

- ASHOK KUMAR

OLD yielded the best returns across traditional asset classes in the last quarter of 2024. Smart investors have historically used gold as a natural hedge in their portfolios to their equity holdings as in periods of crisis, when equities tend to consolidate or weaken, gold has surged.

This was clearly witnessed in the early months of 2020, when the first Covid wave swept across the globe. After a brief lull, it was witnessed again following the break-out of hostilities between Russia and Ukraine that escalated into a full-blown war. A weakening US dollar back then and the near complete collapse of several crypto-currencies had investors rushing back to the relative safety of the precious yellow metal, historically known to be the asset class of the last refuge.