Analyst: Gold rush on Wall Street, but investors should remain vigilant

Analyst Karishma Vanjani says Wall Street is on a gold rush, but investors should be careful. JP Morgan and Goldman Sachs are recommending continuing to hold gold, Farabas Bank has just raised its forecast for the price of gold, and BlackRock has been recommending buying gold to diversify its portfolio for months. So far, these recommendations have been sound. But it's not without risk. Firstly, given that it has been in a bull market since September 2022, gold is arguably overvalued. This increases the likelihood that the price of gold has largely reflected the potential of this period and is therefore vulnerable to a pullback. These gains may entice early investors to sell to lock in profits. Secondly, gold may also struggle in the event that the US government's efforts to reform the federal government prove successful. Further, economic growth is negatively correlated with gold. When the economy is booming, investors tend to favour riskier assets such as equities over gold, which has lost its appeal.