Gold remains sluggish, holding below $ 1,800 an ounce. Despite that, the market is optimistic, said the London Bullion Market Association (LBMA).

During its annual digital conference, the LBMA said gold continues to play an important role in an investor's portfolio.

Thus, they expect that prices will still become higher next year even though interest decreased this year. To be precise, they expect the yellow metal to trade at $ 1,969 an ounce by next year, which is lower than their earlier projection of above $ 2,000 an ounce.

Investors are also asking what role gold plays when it faces record stock market performance and a potential shift in US monetary policy.

As a keynote speaker at the conference, Barry Eichengreen, professor of economics at the University of Berkeley, said he did not see gold as a great hedge against inflation because even though inflation is transitory, the Federal Reserve will continue to lag behind a curve that will force them to rush and catch up. So, instead of looking at it as a defense against inflation, Eichengreen sees the precious metal as a defense against uncertainty.

John Reade, chief market strategist at the World Gold Council (WGC), agreed on this and said it was the reason why gold has been in a quandary lately. As such, he is not surprised by weak interest in the metal as stock markets move from record highs to record highs.

And considering that demand for gold remains unstable this year, Reade said uncertainty in the market will only grow more and more.