Interview Questions on Gold

So I got these questions at an interview and I have no idea what the right answers are (I don't know much about commodities). Could anyone help me out?

"Usually gold and the stock market have an inverse relationship, why is that?"

"Lately gold and the stock market having been moving up in unison, what is causing that to happen?"

Any help would be greatly appreciated.

 

the first question is related to the fact that gold is seen as a stable investment, and so when the markets goes south people buy gold because it's "safer".

the second one i'm not really sure about, but maybe the historically low interest rates are moving people to purchase gold (gold is often used to hedge against inflation), and so while the markets may have been going up recently, gold was also going up due to inflationary fears? again, not really sure... just taking a stab at it.

 

Higher expected inflation due to the expected increase in the money supply from the federal reserve would mean more capital to invest in the stock market and higher stock prices, as firms would theoretically have more money to invest and increase earnings.

The increased inflationary fear would lead investors to seek a store of wealth/hedge against the inflation, which would be gold and other precious metals, such as silver. Hence the increased demand means higher prices.

 

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