Gold and Silver: Volatility is undermining their role as portfolio diversifiers – HSBC

HSBC Asset Management said gold and silver posted dramatic price swings in 2025, fueled by geopolitical risks and worries about the Federal Reserve’s independence, before evolving into a retail-driven speculative phase. Analysts caution that leveraged selling could increase their correlation with equities, but note that central bank de-dollarisation efforts and crisis-related demand continue to support the long-term structural case for precious metals.

Safe-haven demand weighed against speculative flows

“This year’s moves in gold and silver have been extraordinary.
Sparked by geopolitical tensions and concerns over the Federal Reserve’s independence, the 2025 rally morphed into a retail-driven speculative surge, making a correction increasingly probable.

So where does that leave investors who rely on gold as a portfolio diversifier? Although retail inflows lifted returns, they also brought equity-like volatility — at odds with gold’s traditional safe-haven role.

That said, recent turbulence shows that no safe haven is perfect, reinforcing the case for ‘diversifying the diversifiers’: taking an active, multi-asset approach to seek uncorrelated returns across a wide range of assets.”

Sources: Fxstreet