Gold is an attractive safe haven asset
Investors avoiding buying gold because the US Federal Reserve is unclear about cutting interest rates this year are looking in the wrong direction, a market strategist said.
Gold has historically been sensitive to US monetary policy, as higher interest rates increase the opportunity cost of holding non-yielding gold. Higher interest rates also support the US dollar, putting further pressure on gold.
In a recent interview with Kitco News, Kathy Kriskey, commodity strategist at Invesco, said investors should pay attention to a new factor driving gold prices.
Kriskey explained that investors are turning to gold as a hedge against global economic and geopolitical uncertainty. She pointed out that this sentiment is not new, as many older investors have long viewed gold as a hedge against wealth. However, what is surprising is that even younger investors are starting to take an interest in gold as market volatility increases.
“If you are an investor and something scares you, you need to have gold in your portfolio. Gold is a safe, solid hedge,” she said.
Kriskey also said that the volatility in the stock market is causing investors to reassess the health of their portfolios. She noted that disruptions in the technology sector are causing many to question the valuation of the stock market.
Gold’s recent rally has been a record, pushing prices up more than 8% in 2025. Meanwhile, US stocks are up just 2.8% and even the US dollar has fallen this year.
When asked why gold is an attractive haven asset, Kriskey pointed to the main buyers in the market: central banks looking to diversify away from the US dollar.
She cited the People’s Bank of China as a prime example, which bought gold for 18 consecutive months, then paused for six months in mid-2024, before returning to the market at the end of the year.
“China’s reserves are only 5% gold, so I believe China will continue to buy, especially when they have tensions with US President Donald Trump. They need to reduce their dependence on the US dollar. So not only China but also other central banks are creating an important floor for gold,” she said.
Invest in a wide basket of goods
While gold is an attractive haven asset, Kriskey notes that it has its limits. She does not see gold as a strong hedge against inflation. Instead, she recommends that investors looking to protect themselves against economic uncertainty and inflation invest in a broad basket of commodities, with a large weighting in gold.
“I’ve always favored gold — it’s one of my favorite commodities. But I don’t like gold in 2021 and 2022 because it’s not a good hedge against inflation,” she said.
Kriskey's final piece of advice for investors is to not chase gold and other commodities like coffee when they are at record highs.
“I think gold will lead the way this year. But as an inflation hedge, I would create a diversified basket of three sectors: energy, metals and agriculture.
Your portfolio should have a diversified commodity component for many reasons, but wait for small corrections, be patient and add gradually when prices fall,” she said.
