Three ways to view the gold rally from an equity viewpoint

GOLD prices rose above US$2,000 per ounce for the first time in August, as investors responded to a weaker US dollar, record-low US real yields and intensifying US-China geopolitical tensions. The unprecedented amounts of stimulus and other relief funding used globally to prop up economies hobbled by the Covid-19 pandemic, including rock-bottom interest rates, have also continued to be a boon for the price of gold.

Although gold prices reached historic highs this summer, we still see some potential drivers that could move prices even higher. In our view, gold may benefit from bouts of elevated market volatility and mounting concerns over the coronavirus's economic impact as investors seek perceived safe-haven assets. A classic feature of gold is its very low correlation with other asset classes, supporting increased interest in owning it as a portfolio diversification tool in uncertain markets.

Opportunities for gold producers