Is gold loosing its safe haven status?

Gold maybe losing its status as a safe haven asset according to some analysts after failing to capitalize on recent events happening around the world

The trade war brewing between the US and China which also involves Canada and Europe has caused world stock markets to tumble with the Dow Jones index falling over 1 percent already this week.

In earlier times when the stockmarket fell investors would park their money in gold due to the uncertainty but this time around the precious metal is being shunned.

 “The fact that gold has tumbled to a fresh 2018 low this morning despite global trade tensions weighing on sentiment, continues to beg the question if the precious metal has lost its safe-haven appeal,” noted Lukman Otunuga a research analyst at FXTM

Mr Otunuga also noted that the anticipation of higher interest rates in the US is also putting pressure on gold as investors seek out the US dollar to enhance their returns.

Gold is only sought out for capital gains and is not an interest-bearing asset.

“Price action suggests that a stronger dollar and expectation of higher U.S. interest rates [remaining] gold’s biggest nemesis,” Mr Otunuga added.

The material published in on this page is produced by the FIBO group companies, and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC; furthermore it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Analyst

The world of trading has no boundaries

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 58% of retail investor accounts lose money when trading CFDs with this broker. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

IMPORTANT: Please be informed, that our services are available for Professional Clients only. Our website is currently under review for the implementation of the correspondent amendments.

Important notice
By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Please familiarize yourself with the Customer Agreement through the link. Click "Cancel" to remain on this page.