Are Gold And Oil Effective Hedging Tools For Investors?

Summary

• Gold and oil are frequently viewed as a hedge against geopolitical tension but have diverged sharply in performance this year amid heightened geopolitical uncertainty.
• Gold appears to have better supply-demand dynamics than oil and has been benefitting from concerns about the path of U.S. debt and deficits, regardless of the election outcome.
• Generally speaking, commodities have been uncorrelated to U.S. stocks, bonds, and real estate. As a result, they may help reduce risk in a broad, diversified portfolio.

adventtr

By Kristy Akullian, CFA

Gold and oil have been on the upswing lately amid heighted geopolitical tensions in the Middle East. But oil remains well off its 52-week high and has experienced choppy performance this year - underperforming energy stocks and