DNA Money Edit: How gold helps reduce your portfolio risk

After a long hiatus, gold is on an upswing. As equity and debt markets are in the throes of a continued flux, the yellow metal is expected to see more momentum this year, with some central banks buying gold. A rise in gold purchases by central banks to the highest since 1967 helped push global demand for the metal up 4% in 2018, the World Gold Council (WGC) said.

Surely, gold has started this year on a strong note. It is expected to grow, given the uncertain trade outlook and the recent US Fed policy reset. The US Fed tilted towards dovish stance in January, giving an impression that it is unlikely to go for a rate hike this year. What's more, the Fed is concerned about the slowing global macro backdrop and gloomy trade scenario.

The reason for the high price of the yellow metal is also being attributed to the peak wedding season demand. According to WGC's December quarter report on gold demand trend, the market has witnessed a rise in the number of consumers preferring exchange-related products amid the volatile local gold prices.

Given a weaker dollar, dormant US rates and a dovish US Fed, gold is likely to get a push. Gold will be a useful portfolio diversification tool for many investors and may help them reduce their portfolio risk. But caution is the name of the game for long-term investors.