Gold is rallying in lockstep with the S&P 500, suggesting investors are still concerned about global macro risks. | Image: shutterstock.com
- Gold and stocks are rallying in lockstep with each other.
- Appetite for gold is driven by safe-haven demand despite surging stock prices.
- Analysts believe the gold bulls still have the upper hand in 2019.
Stock Market up BIG! Record highs for S&P 500 and NASDAQ. Enjoy!
— Donald J. Trump (@realDonaldTrump) November 1, 2019
Gold, along with traditional safe haven assets like bonds, have continuously been on the rise over the past two weeks, amidst fears of a possible recession despite the strong performance of the equities market.
The upside momentum of gold during an extended stock market rally indicates that investors are not fully convinced fundamental issues including geopolitical risks are resolved.
Why gold is rising amid S&P bull market
According to Citigroup investment strategist Ken Peng, the stock market selloff of Q3 was caused by an overreaction from investors.
Peng noted that investors feared slowing global economic growth, Brexit and the trade war, which added to international geopolitical risks and led to an increase in demand for safe havens.
“Investors were panicking about the trade war, global growth and Brexit in the summer and now they realized the situations aren’t that bad. I’d recommend investors to focus more on equities and high-yielding bonds in the coming three to six months.”