As markets sway, safe havens shine — except gold
GLD•Gold fell below $4,000 an ounce to a one-year low even as market volatility revived demand for other traditional safe havens. Bullion is down 9% this year and about a quarter since the US and Israel first attacked Iran on February 28.
1. Gold diverges from havens
Recent AI-related market turbulence has pushed the S&P 500 and Nasdaq from record highs, while investors sought protection in US Treasuries, the dollar, the Swiss franc and the Japanese yen. Gold, however, fell below $4,000 an ounce on Friday, its lowest level in a year, despite lower bond yields and weaker expectations for US rate hikes.
2. Central bank demand rises
Central-bank gold purchases increased 42% in the third quarter to 321 metric tons, the highest quarterly total since the fourth quarter of 2024, with Poland and China leading reported buying. A July International Monetary Fund paper said gold is not a reliable hedge against equity volatility and that its safe-haven properties are neither universal nor unconditional. Standard Chartered estimates gold’s positive correlation with the S&P 500 at 0.48 over three months and 0.69 over one month.
3. A possible rebound
Gold is down 9% year to date, the worst performance among 14 major asset classes tracked by Bank of America, and is trading about 10% below its 200-day moving average. Strategists cited in the article said that if stock-market losses create liquidity needs, investors may sell gold rather than buy it, with its role as a source of cash likely to outweigh its safe-haven appeal in the short term.
