Gold is a commodity that is commonly used in jewelry and a variety of electronic products and equipment due to its conductivity, malleability, and durability.
Gold is one of the oldest safe-haven assets.
Traders view gold as an excellent store of value because unlike national currencies, governments can’t just create more of it whenever they want to.
Of course, gold has its drawbacks as well.
The biggest problem with gold is that it is a non-yielding asset.
Gold doesn’t pay a dividend or generate earnings. It just sits there.
This is less of an issue, however, when bond yields are as low (or negative).
When traders can’t find much yield, they’re less concerned about the opportunity cost of moving their money to a non-yielding asset like gold.
The value of gold is driven by demand.
When demand is high, the value of gold goes up. When demand is low, the value of gold goes down.