WGC: Gold Shows Resilience Amid Rising 2025 Market Volatility
Gold | 2025-12-22 04:39:29
For portfolios, higher equity volatility combined with a positive stock-bond correlation has increased risk and weakened traditional diversification benefits.
By Paul Ploumis
SEATTLE (Scrap Monster): Amid tariff uncertainty, inflationary pressures and rising geoeconomic tensions, global markets have seen heightened volatility in 2025, says the World Gold Council (WGC).
A comparison of realized volatility across gold, US equities and US Treasuries highlights challenges investors have faced this year. Equity and gold markets recorded higher volatility, driven by an intensified geopolitical and geoeconomic environment, including a sharp spike following initial tariff announcements earlier in 2025. By contrast, US Treasury volatility has trended lower. Volatility across major asset classes remains broadly in line with long-term averages.
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Gold’s volatility has risen alongside its strong price rally this year, but it remains close to historical norms and well below levels seen during past periods of similar performance. Short-term price surges led to brief volatility spikes, which quickly normalised, underscoring gold’s resilience, WGC noted.
For portfolios, higher equity volatility combined with a positive stock-bond correlation has increased risk and weakened traditional diversification benefits. In this setting, gold continues to stand out as an effective diversifier due to its low correlation with equities and fixed income assets.
Adding a 5% allocation to gold can cut portfolio risk by 5%, reinforcing gold’s role as a stabilising asset amid uncertainty for investors.
POLL
Which asset class do you expect to provide the most stability in volatile markets like 2025?
Frequently Asked Questions
- What caused market volatility in 2025?
Tariff uncertainty, inflationary pressures, and rising geopolitical and geoeconomic tensions drove heightened volatility in equities and gold.
- How did gold perform compared to equities and bonds?
Gold showed resilience, with volatility near historical norms and a low correlation to equities and fixed income, making it an effective portfolio diversifier.
- What is the benefit of including gold in an investment portfolio?
Adding a 5% allocation to gold can reduce portfolio risk by approximately 5%, enhancing stability amid market uncertainty.
