New Delhi: Volatility in gold prices has declined and its response to interest rate hikes has become increasingly asymmetric, signalling a deeper, structural shift in the metal’s role in global portfolios, said Llama Research in its June edition.According to the report, gold is no longer being driven purely by speculative flows or short-term rate expectations.
“Volatility in gold has declined. Its reaction to rate hikes is asymmetric. Trust, not yield, is becoming the core driver,” the report added.
The report added that the gold which was once viewed as a tactical hedge against short-term uncertainty is increasingly being treated as a structural asset in investment portfolios.
The yellow metal’s behaviour post-2020 signals a fundamental shift in how global investors perceive its role which is less like a volatile commodity and more like a stable, reserve-like asset, the report added.
Traditionally, rising real bond yields have had an inverse correlation with gold prices. But that relationship has weakened noticeably in the post-pandemic landscape, the report said, adding that despite surging yields, gold has managed to hold its ground, defying conventional financial logic and underscoring a shift in investor sentiment.
“Gold is behaving more like a bond than a bet. It’s becoming a structural allocation, not just a tactical hedge,” noted Llama Research.
Gold’s appeal lies not just in crisis-driven uncertainties but in its growing utility as a trusted store of value in times characterised by currency uncertainty, geopolitical risk, and weakening confidence in fiat regimes.
Central banks of emerging markets have been continuously buying gold in the wake of rising geopolitical tensions and the weaponisation of the US dollar, the report pointed out.
Gold prices in India breached the Rs 1 lakh per 10-gram mark to reach an all-time high level earlier this week. As of today, the price of Gold is trading at 99,096 for 10 grams on the Multi Commodity Exchange (MCX).