While gold is often seen as a hedge against inflation, gold could still rise despite fears of deflation around the world, William Rhind, CEO of World Gold Trust Services, told CNBC on Tuesday.
That is because governments often respond to deflationary forces in the global economy by weakening their currency for competitive reasons, he said in a "Closing Bell" interview from the Inside ETFs conference in Hollywood, Florida.
"Currency weakness or debasement has typically been a good thing for gold," he said.
World Gold Trust Services is the sponsor of the largest gold exchange traded fund, the SPDR Gold Trust. The ETF saw units outstanding increase 3.4 percent week-over-week through Jan. 26, increasing its weekly inflows by 8.2 million units.
Gold prices have risen nearly 3 percent over the last year.
As for whether falling oil prices will prompt crude producers to liquidate gold reserves, Rhind said that has not been the case for Russia, the biggest buyer of gold from a central bank perspective.
"What we've seen is Russia coming into the market and buying even more gold" as a result of the oil shock, he said.
Rhind said he cannot be certain that other countries will react in the same way, but the positive reaction from Russia underscores the point that gold priced in nondollar currencies performed well last year.