As global markets continue to wrestle with mounting volatility and uncertainty, a fresh perspective is emerging regarding one of the oldest and most trusted commodities: goldTraditionally regarded as a safe haven asset during times of crisis, gold has seen renewed interest, driven in part by a shift in investor sentiment and an increasingly complex geopolitical and economic environmentKathy Kriskey, a renowned strategist, has offered insights into why gold is once again gaining traction among investors and the factors driving its price growth.

Gold has historically been a sensitive asset, closely linked to U.S. monetary policy, and particularly to interest ratesDuring periods of rising interest rates, gold, which does not generate yield, often faces headwinds as the opportunity cost of holding it increasesAdditionally, higher interest rates typically lead to a stronger U.S. dollar, which further depresses gold pricesThis traditional inverse relationship between gold and interest rates has been a staple of the precious metals market for yearsHowever, as Kriskey points out, we are currently witnessing a shift in this pattern, with gold prices moving upward despite the prevailing economic conditions that would typically lead to a decline.

Kriskey attributes this unexpected resilience to gold to the growing uncertainty in the global economyGeopolitical conflicts, combined with inflation concerns and the aftershocks of the pandemic, have led many investors to reassess the stability of traditional financial marketsThe rising volatility, particularly in the tech sector, has left many questioning the sustainability of stock market valuationsAmidst this backdrop, a growing number of investors are flocking to gold as a protective measureThis surge in demand isn't just coming from the usual institutional buyers and central banks; an increasing number of retail investors are also entering the market, attracted by the relative stability gold offers.

This renewed focus on gold is further bolstered by actions taken by central banks around the world

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As Kriskey emphasizes, many central banks are seeking to diversify their reserves away from the U.S. dollar, particularly as the dollar's strength becomes more uncertain in the face of geopolitical tensions and shifting trade dynamicsThis trend has been a crucial factor in supporting gold pricesAccording to the World Gold Council, central banks purchased over 1,000 tons of gold in 2024, marking the third consecutive year of such large-scale purchasesThis continuous accumulation has created a robust support level for gold, which is helping to stabilize prices even as other markets experience turbulence.

In fact, gold has performed remarkably well over the past year, outperforming many other traditional asset classesAs Kriskey notes, gold prices have surged more than 8% in 2025 alone, while U.S. stocks have managed only a modest increase of 2.8%. At the same time, the dollar has shown signs of weakness, further boosting the appeal of gold as an alternative store of valueThis divergence between gold and the performance of other financial assets has prompted many to reconsider the role that gold can play in a diversified investment portfolio.

However, while gold is once again the focal point of many investors' strategies, Kriskey provides a nuanced view of its role in the broader economic landscapeDespite its reputation as a safe haven asset, gold is not without its challenges and limitationsKriskey cautions against viewing gold as a foolproof hedge against inflation, noting that its price movements are influenced by a variety of factors that can sometimes lead to inconsistent correlations with inflation trendsShe points out that while gold has historically rallied in response to periods of economic instability, its effectiveness as an inflation hedge can vary depending on the underlying causes of inflation and the broader market context.

For example, in the years 2021 and 2022, Kriskey notes that gold did not perform as expected in terms of protecting against inflation

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During those years, inflation fears were high, yet gold's price movements were relatively mutedThis divergence led Kriskey to take a more cautious stance on gold during that periodHowever, she now believes that the outlook for gold has improved significantly, especially in the context of the ongoing global economic uncertainty.

Kriskey's advice for investors is clear: while gold can be an important part of a portfolio, it should not be relied upon as the sole solution for hedging against inflationInstead, she advocates for a diversified approach that includes not only gold, but also a broader basket of commoditiesThis diversified strategy should feature key sectors such as energy, metals, and agriculture, which collectively provide a more balanced approach to managing riskBy combining these commodities, investors can better navigate the uncertainties of global markets while taking advantage of the unique benefits each sector offers.

"I love gold; it leads the way and remains one of my favorite commodities," Kriskey says. "But I wasn't fond of gold in 2021 and 2022 because it wasn't an effective inflation hedgeI expect gold to be a frontrunner this year, but for inflation hedging, I would build a basket that encompasses three sectors: energy, metals, and agriculture." This holistic approach reflects Kriskey’s belief that no single asset can effectively hedge against all the risks posed by inflation and market volatilityInstead, a multi-faceted strategy is essential for optimizing returns and safeguarding wealth in the face of uncertainty.

Another crucial point Kriskey raises is the importance of timing and patience when investing in commodities like goldShe stresses the importance of avoiding the temptation to chase prices during periods of extreme volatilityWhile it can be tempting to buy into commodities when they reach historical highs, Kriskey warns against this approachInstead, she advises investors to wait for price corrections and to exercise discipline when entering the market

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