We continue our correlation journey on macro data with Sismo Analytics, analyzing gold’s latest rally.
While gold is often seen as an inflation hedge and safe-haven asset, its relationship with equity sectors is more nuanced than a simple "risk-off" trade. Which sectors move in sync with gold - and which go the other way?
Sectors Most Positively Correlated With Gold:
Metals & Mining - No surprise here; gold miners thrive as prices rise.
Utilities - Defensive? Inflation hedge? Sismo reveals a strong link, possibly due to their bond-like characteristics in a low-rate environment.
Real-Estate - Another real asset that responds to inflation and falling rates, often moving in tandem with gold.
Software - A surprising result. This may indicate a flight to quality within tech, where cash-flow-rich firms behave defensively.
Sectors Least (Negatively) Correlated With Gold:
Automobiles - Rising gold often signals macro uncertainty, which does not favor consumer-driven sectors like auto.
Banks - A classic inverse relationship: higher gold often means lower rates, which pressure banks’ margins.
What This Means for Investors
Gold isn’t just a hedge against uncertainty - it has real, measurable connections with equity sectors. Sismo helps uncover these relationships in real-time, giving investors a macro-driven edge in portfolio positioning.
How We Measure This in Sismo
Our analysis covers MSCI World ETF constituents, showing correlation to %change in gold price over:
- 5Y weekly (from left to right)
- 10Y weekly (from top to bottom)
- 15Y monthly (from red to green)
We visualize this in 3D, with banks framed in white to highlight their distinct behavior. The table view ranks sectors based on their median decile positioning, offering a clear and intuitive scoring system for investors.
