Safe Haven Amidst Volatility? Gold Tops $3000 As Market Corrects But It Tends To See 'Painful Drawdowns After Periods Of Sharp Gains,' Says Expert
As the stock market wades through volatility, gold surged above $3000 per ounce on Friday. While the traditional safe haven for investors soars amid uncertainty, this expert highlights how the yellow metal undergoes correction after sharp gains.
What Happened: Gold hit an all-time high of $3,005.08 per ounce on Friday, however, D Muthukrishnan, a certified financial planner highlighted in an X post that “Gold too corrects, like every other asset class.”
According to a dataset shared by FundsIndia, “The precious metal has experienced painful drawdowns after periods of sharp gains.”
After peaking in Jan. 1980, gold declined 56% over two years and took 9 years and 11 months to recover. Similarly, after a November 2012 peak, the gold prices slid 30% in nearly three years and took 6 years and 7 months to recover.
However, he added that “Gold too has a place in an investor’s portfolio.”
Underscoring the reason for the upmove in gold, Aditya Sesh, the founder and managing director of Basiz Fund Services said that “Any global uncertainty will push gold prices further up due to risk aversion. The current status leads one to conclude that there is high global uncertainty. This is reflected in FX and stock market movements.”
Additionally, Adam Rossi of TotalShield highlighted PriceInGold.com’s data and explained that if the S&P 500 index was priced in terms of gold rather than dollars, the index has been flat since 2006.
Why It Matters: Despite the contrarian point of view on the yellow metal’s price surge and how it is not safe from corrections, Michael Saylor of Strategy Inc. (NASDAQ:MSTR), formerly MicroStrategy, compared Bitcoin (CRYPTO: BTC) to gold in the 1970s. He said, “Bitcoin today is Gold back in the 1970s,” adding that Bitcoin could climb to $300,000 per coin.
Price Action: At the time of the publication of this article, the gold spot was trading 0.46% higher at $2,998.27 per ounce. Whereas, the U.S. dollar was down 0.21% to the 103.497 level.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, dropped in premarket on Monday. The SPY was down 0.18% to $561.82, and the QQQ also declined 0.10% to $479.18, according to Benzinga Pro data.
SPY closed 2.07% higher at $562.81 and QQQ rose 2.42% to $479.66 on Friday.
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Posted-In: Aditya Sesh D Muthukrishnan Gold gold pricesEquities News Commodities Markets
