Is gold the safe haven?

While various commodities and indices reel under the pressure of rising inflation that shot up to over 11 per cent on Friday, gold is the only instrument that has shown a positive return.

While various commodities and indices reel under the pressure of rising inflation that shot up to over 11 per cent on Friday, gold is the only instrument that has shown a positive return. Since January 2008, gold prices have risen by 12 per cent.

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Equity markets have a negative correlation with inflation and hence the returns dip when inflation is on a high. Over the past one year returns from the Sensex is a mere 1.1 per cent. On the other hand, gold generated returns of 42 per cent.

“Gold acts as a hedge against inflation and investors should look to get into gold -- though with limited exposure of the total asset,” said Veer Sardesai, a Delhi-based financial planner.