Gold is a nice defensive hedge: BMO's Carol Schleif

Core Viewpoint - The sentiment towards gold is shifting from bullish to cautious, with suggestions to take profits and rebalance portfolios as demand dynamics change [1][2][3]. Market Dynamics - There has been a notable shift in gold demand, with strong buying observed in the US, particularly through ETFs, while global central banks are reducing their purchases and demand from Asia is weaker than expected [2][3]. - The recent surge in gold prices is attributed to increased buying in the US, contrasting with the declining demand from global central banks and weaker Asian markets [3]. Investment Strategy - Investors who have seen significant gains in gold over the past year or two are advised to take profits and consider reallocating a portion of their investments back into US bonds, which are currently at more than 10-year lows [4][11][12]. - A strategic approach involves not becoming overly invested in assets that have recently appreciated significantly, suggesting diversification into bonds as a compelling option [11][12]. Psychological Factors - Gold serves as a psychological hedge in investment portfolios, contrasting with other assets like cryptocurrencies, which are still being defined in terms of their role as a currency or hedge [6][7][8]. - The current interest in gold may reflect a search for stability amid market volatility, as investors look for safe-haven assets [5][6].