Continued selling pressure in the stock markets is helping the gold market shine again as a safe-haven asset. Rising inflationary pressures exacerbate growing downside risks, some economists say.

Market analysts say investors are fleeing equities as rising inflation puts pressure on first-quarter earnings.

The S&P 500 dropped 4% on Wednesday, its worst single-day drop since June 2020. Selling pressure hasn't eased much as we saw the S&P drop another 1% on Thursday.

Meanwhile, gold prices managed to find support at $1,800 an ounce on Wednesday, with some technical follow-up buying on Thursday.

According to Craig Erlam, senior market analyst at OANDA, investors have again taken refuge in gold, as they are reacting to the threat of a recession, and not just expectations of higher interest rates. The rate hike has boosted yields and made the dollar more attractive.

While gold's price performance has been disappointing over the past two months, some analysts say it has played its role as a safe-haven asset, outperforming equity markets.

In the near term, some analysts suggest even lower stock prices.

Stocks provide vital support for gold, but inflation remains the main driver for the precious metal.

In terms of absolute returns, gold's full-year dollar performance can be seen as disappointing, but with the impact of a stronger dollar and steep losses in stocks and bonds, any diversified gold investor is likely to be satisfied.