Gold, as a traditional asset allocation, remains a worthy choice

Since 2024, gold prices have repeatedly reached new highs, showcasing its strong safe-haven appeal and long-term appreciation potential amid global macroeconomic volatility and geopolitical uncertainty. As of 2025, gold has risen over 29% cumulatively, making it one of the best-performing assets in recent years. This trend underscores the strategic value of gold as a long-term investment tool—it not only offers stability during market turbulence but also benefits from an environment of high inflation and rising expectations for monetary easing. For investors, gold maintains an irreplaceable position in diversified portfolios, acting as ballast in turbulent times. The continued accumulation of gold by central banks and the growing interest from individual investors seeking risk hedging have firmly established gold as a cornerstone of strategic asset allocation. Going forward, as global monetary policies shift, geopolitical tensions evolve, and volatility in emerging assets like digital currencies intensifies, gold’s role as a safe-haven and store of value will become even more pronounced.

Smart Investors Shift from Cash to Gold

Amid a reconfiguration of the global economic landscape—exacerbated by rising trade frictions and policy uncertainty—investors are reshaping their asset allocation strategies. According to HSBC’s $HSBC Holdings PLC(HSBC)$ “Affluent Investor Snapshot 2025: A Quality of Life Special Report”, savvy investors are increasingly turning to alternative assets such as gold, real estate, hedge funds, and private equity. This shift is not a short-term response to volatility, but rather a long-term structural transition based on three strategic drivers:

1. Gold as the “ultimate safe-haven” asset has gained renewed appeal amid fluctuations in the dollar-based monetary system, reinforced by ongoing central bank purchases.

2. Tangible assets like real estate and absolute return strategies like hedge funds offer protection in an inflationary environment.

3. A diversified mix of bonds, equities, and alternatives enables portfolios to remain resilient over the long term.

Meanwhile, holding cash is increasingly seen as a drag on returns. Surveys show that high-net-worth investors are most concerned about inflation driving up living costs and eroding the purchasing power of idle cash. Many have reduced their cash positions in favor of more strategic capital deployment. This trend reflects an evolution in modern portfolio theory—in a world where uncertainty is the norm, alternative assets are no longer just diversification tools, but return-enhancing core engines.

Source: Affluent Investor Snapshot 2025: A Quality of Life special report

Gold's Volatility Is Significantly Lower Than Equities, Alternatives, and Commodities

Another key reason gold continues to attract investor interest is its relative price stability compared to equity indices and other commodities. Backed by a large market size, high liquidity, and diversified demand sources, gold’s price fluctuations are far less volatile than most stock indices, alternative asset classes, or raw commodities—making it a rare “stabilizer” in portfolios.

Source: World Gold Council

The depth and breadth of the gold market underpin its price stability. As a global asset, gold sees daily trading volumes exceeding $100 billion, making it difficult for any single player to manipulate prices. It is also highly liquid, enabling 24/7 global trading, which further dampens volatility.

Moreover, gold’s demand is highly diversified—spanning central bank reserves, jewelry consumption, institutional asset allocation, and individual investor hedging. This multi-tiered, globalized demand structure ensures that even if one segment weakens, others step in to provide support, reducing the risk of sharp price drops. In contrast:

• Stock indices are sensitive to single-country policy changes,

• Alternative assets often suffer from poor liquidity,

• Commodities are prone to sharp swings due to supply-demand imbalances.

Gold’s unique market characteristics give it exceptional resilience during risk events, reinforcing its value as a volatility buffer—especially under current geopolitical tensions and monetary policy shifts.

Digital Gold ETFs Rise in Popularity Among Young Investors

According to the HSBC report, over 50% of respondents plan to hold gold in the next 12 months—a figure twice the current ownership level. Among them, 41% prefer physical gold, while 28% are leaning toward digital gold products. Young investors, in particular, are showing increasing enthusiasm, with tokenized gold assets emerging as one of the most in-demand products of the year. Compared to physical bullion, gold ETFs offer distinctive advantages that appeal to the younger generation.

In H1 2025, gold’s average daily trading volume hit $329 billion, a record high for the period. However, trading volume declined by 20% in June, likely due to short-term equity market rebounds and weakened upward momentum in gold.

Notably, OTC (over-the-counter) markets were especially active, with average daily volumes reaching $165 billion, significantly higher than 2024’s average of $128 billion. Exchange-traded volumes also surged, with daily activity averaging $159 billion, driven by increased trading on COMEX and the Shanghai Futures Exchange.

Meanwhile, global gold ETFs continued to show strong demand, North America saw daily volumes reach $4.3 billion, Asia followed with $0.9 billion daily.

Source: World Gold Council

Spot Price Trend Analysis

Gold prices returned above $3,400 this week but faced strong resistance around $3,440. On Wednesday, prices dropped $50 in a single day due to profit-taking. A retest of the upward trendline support is likely, which—if confirmed—could generate new momentum for another test above $3,400. In the bigger picture, gold remains in a bullish trend. However, a breakout to new highs beyond $3,440 still requires a catalyst. Considering ongoing tariff concerns, J.P. Morgan $JPMorgan Chase(JPM)$ recently raised its Q4 gold target to $3,675, up from $2,950.

Source: TradingView

Invesight Viewpoint

In a world of increasing global uncertainty, gold has emerged as a unique asset class with strategic importance. HSBC’s latest report reveals that high-net-worth investors are actively increasing their gold allocations, driven by three key advantages:

1. Outstanding inflation protection, with an annualized return of 15% since 2024

2. Superior price stability, with volatility 35% lower than major stock indices

3. Diverse investment channels, including ETFs and digital formats that boost allocation efficiency

Market data shows that average daily trading volume in H1 2025 reached $329 billion, with North American gold ETFs alone accounting for $4.3 billion. As central bank accumulation continues and younger investors flock to digital platforms, gold has evolved from a traditional hedge to a modern core holding—providing both resilience and return potential in a volatile market. With uncertainty likely to persist, this allocation boom shows no sign of slowing. For investors looking to optimize portfolios, a prudent gold allocation can enhance downside protection and capture long-term growth.