Traders usually know two things about as an asset class – it is a reliable store of value, and it is a safe haven in times of trouble.
Put slightly differently, one would expect gold prices to rise when other assets, such as cash, are losing their value, perhaps because of inflation. Similarly, political and economic turmoil would be likely to stoke demand for gold.
All this is true, up to a point, but there are caveats. More on that in a moment.
A turbulent period
First, the current state of the gold price.
It has not been a good three months for bullion. From $1,274 an ounce in late June, it is currently just above $1,200. Shortening the timeframe to the last month gives a brighter picture, given that the price was down at about $1,185 in late August.
But widen it out again to take in the past year, and the story is once more one of decline, from about $1,312 an ounce.
But bear in mind that gold has a competitor, both as a safe haven and as an international monetary asset – the dollar. Once, they were intimately bound together, with $35 being always and everywhere worth an ounce of gold, and vice versa. That link is long gone, now the two assets tend to move in opposite directions.