Gold Isn’t A Hedge Anymore
Gold enters a new phase
Gold has bounced hard off key long-term support, but the move is starting to look stretched. Volatility remains elevated, positioning is shifting, and the way gold is behaving raises a bigger question: is this still a hedge, or just another risk asset?
Gold - what now?
Gold bounced on the longer-term trend and the 200-day MA during the latest washout. The bounce has been powerful, but yesterday's shooting star candle is telling us this is becoming short-term extended.
Gold has seen too much volatility and likely needs more time to consolidate.
A period of consolidation inside the $4400–$5000 range would not be surprising.
Source: LSEG Workspace
Elevated vol
Gold volatility remains relatively elevated, which is not surprising given recent price action. The market is still pricing daily moves of over 2%, high for an asset that is effectively just sitting there. Elevated volatility prevents central banks/systematic strategies from re-engaging, limiting a longer-term rebuild in gold despite fundamentally bullish physical demand.
Explore net sold options strategies if you think gold is going to chop for longer (more here).
Source: LSEG Workspace
Just another risk asset
Gold hasn’t been a true “global hedge” for a while, even if that story still gets sold. It’s trading like just another risk-on, risk-off asset.
Note the latest short-term gap vs SPX.
Source: LSEG Workspace
Not a global hedge
The idea of gold as a global “VIX hedge” doesn’t hold up. During the latest volatility spike, it moved in the opposite direction.
Source: LSEG Workspace
The rates vol connection
Few are talking about it, but gold and bond volatility are closely linked. The chart shows gold vs inverse MOVE.
Source: LSEG Workspace
Liquidation
Iran war escalation triggered around $6bn of managed money net liquidation in the second half of March.
Source: GS
CTAs in gold
CTA selling has accelerated as short-term momentum turned negative. Chart 2 shows threshold levels.
Source: GS
Source: GS
Stays high
Normalized 25-delta put-call skew remains at very elevated levels. Investors are paying up for downside protection, something that is new and rare in gold.
Takeaway: Gold is no longer trading like a hedge. Elevated volatility, shifting flows, and changing correlations suggest this is now a more tactical, range-driven market rather than a structural uptrend.
