FX.co ★ USD wins as most reliable safe haven

The US dollar is flexing its muscles, taking priority as a safe-haven asset over gold. The greenback has conquered the 20-year peak, unwilling to retreat from such elevated levels. At the same time, the precious metal is less efficient as a shelter from political and economic risks. In the first days of Russia’s invasion of Ukraine, gold surpassed at ease the landmark level of $2,000 per troy ounce and hit $2,079, the strongest level in 19 months. However, the price did not settle at the highs. Gold sank below $1,900 shortly after and even lower to $1,786. Investors have lost faith in gold as a hedging instrument. Gold has not been able to generate considerable demand. A deep plunge remains the most feasible scenario as momentum indicators have reversed downwards on the weekly chart, forex analyst Christopher Vecchio comments on the ongoing trend in gold. High volatility has always been the basic feature of the precious metal. Christopher Vecchio reminded traders that commonly, at the time of market turbulence, gold used to yield bigger profits than the US dollar and Treasuries. Nevertheless, recent changes in geopolitics and global market sentiment did not create either a clear-cut bullish or bearish trend.

All in all, even though gold is viewed as a traditional tool for hedging risks entailed by the US dollar, it has not coped with this function this time. For the time being, the metal might grab the chance for only occasional growth that could be triggered by a revival in the stock market and any statements by the Federal Reserve on a looming recession.