Susannah Streeter, chief investment strategist at Wealth Club, said: “Gold has lost yet more of its lustre, with the precious metal falling out of favour as investors are lured towards higher-yielding assets.
“Bullion has fallen to around $3,790 an ounce, extending its sharp retreat from the record highs reached earlier this year, as a run of resilient US economic data has cemented expectations that the Federal Reserve still has scope to raise interest rates.
“Stronger jobs data and stubborn inflation have reinforced the view that rates are likely to stay higher for longer, pushing up Treasury yields and the dollar, while taking some of the shine off gold.
“Gold may glitter as a safe haven during periods of heightened uncertainty, but it’s far from immune to volatility.
“The precious metal tends to bask in demand when nerves are on edge, but its fortunes can quickly tarnish when expectations for interest rates change, which they have recently.
“Because gold offers no income, it becomes less attractive when bond yields rise, and investors can secure higher returns elsewhere. That’s why investors shouldn’t put all their eggs in a golden basket.
“Gold can play an important role in a well-balanced portfolio, helping to provide diversification and a degree of protection during periods of market stress, but as these recent moves show, relying too heavily on any single asset can leave investors exposed when sentiment turns.”
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