Published On 4/7/2026
Despite the decline in gold prices in recent months, Bloomberg indicates that the factors that prompted investors to turn to physical assets have not disappeared, but rather still exist in light of widening financial deficits and continuing inflationary pressures, which brings attention back to precious stones as an alternative investment category.
She explained that gold, which is traditionally considered the most prominent haven to hedge against inflation, wars, and political turmoil, has lost about 6% of its value since the beginning of the year, affected by the decline in fears related to the war between the United States and Iran, and expectations of a tightening of American monetary policy after Kevin Warsh assumed the presidency of the Federal Reserve Board.
However, this decline does not mean, according to the report, the end of the bet on physical assets, as the United States is still recording a financial deficit approaching 7% of GDP since 2022, while public debt continues to approach the level of $40 trillion, which are factors that may keep inflationary pressures high for a longer period.
The report also quoted analysts who expect inflation to continue at levels ranging between 3.5% and 4%, even as central banks continue to adopt tight monetary policies, warning that any new inflationary shock may strongly restore demand for assets that retain their value.
Gold is declining…and alternatives are emerging
In this context, the report shed light on the gemstone market, noting that rubies, emeralds and sapphires achieved exceptional gains during the 1970s in conjunction with the global wave of inflation, while the prices of some investment diamonds rose several times during that period.
The report believes that the current market differs from the boom of the 1970s, as natural diamonds face increasing competition from laboratory-grown diamonds, which reduces their investment attractiveness, while other stones such as emeralds, zircon, tanzanite, peridot, and morganite seem more able to maintain their value in the long term.
Inflation determines the direction of the market
The report also pointed out that the global wave of investment in artificial intelligence, energy infrastructure, and strategic materials supports continued pressure on commodity prices, from copper and uranium to rare earth metals, which enhances the supportive environment for physical assets in general.
However, he warned that investment in precious stones remains linked to macroeconomic cycles, recalling the collapse of diamond prices by more than 70% in the early 1980s after inflation receded, which confirms that the performance of these assets remains dependent on the path of prices and global monetary policies.
The report concludes that the recent decline in gold prices does not necessarily mean the end of the attractiveness of physical assets, but rather reflects a temporary shift in the mood of the markets, at a time when the structural factors supporting inflation, fiscal deficits, and high investment spending are still in place, which may keep gemstones and precious metals among the options of investors looking for hedging and diversifying their investment portfolios.
