A safe haven during the 2020 pandemic, gold rose 20.9%[i] and outperformed the S&P 500 index which gained 18.7%. However, the commodity has slowed down in 2021 and is down -4.7% for the year[ii] despite widespread inflation concerns. Gold is often viewed as a way to hedge inflation risk, and the recent price drop has left many investors confused. In addition to inflation, gold is influenced by many other factors. A closer look may shed some light.
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[i] Gold is represented by the Bloomberg Gold Sub Index. Return Source: FactSet.
[ii] Source: FactSet. Year to date returns through August 27th, 2021.