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Gold Breaks $5K As The “Safe Haven” Narrative Cracks

Losing momentum

Gold is trading below $5k for the first time in several weeks, with three lower highs forming, hardly a bullish pattern. The 50-day moving average and the longer-term trend line sit just below and remain key supports.

Our range logic still holds for now, but a close below those levels would open the door to further downside. The 100-day MA sits much lower, around $4,600.

Source: LSEG Workspace

 

The war paradox

Gold is widely seen as the ultimate geopolitical hedge, but history shows the relationship is far from straightforward. Following the US and Israel attack on Iran, gold briefly surged to around USD 5,400/oz before reversing lower and now breaking below $5k. This pattern is common: gold often rallies on the initial shock as investors seek safety, but the move tends to fade as markets shift toward liquidity and assets more directly tied to the conflict, such as energy. A similar dynamic followed Russia’s invasion of Ukraine in 2022, when gold jumped about 15% before falling 15–18% as the Federal Reserve tightened policy.

Source: UBS

 

No edge hedge

Gold has not behaved like a global hedge lately, even though many still cling to that narrative. Markets evolve, and recognising when an asset’s behaviour changes is critical. Trading yesterday’s narrative is trading with no edge.

Source: LSEG Workspace

 

Money for nothing

Gold volatility has come down from the panic highs, but GVX remains rather elevated. We continue to see overwriting strategies used for yield enhancement, making gold volatility an attractive income trade.

Source: LSEG Workspace

 

The switch

The switch between physical and digital gold continues. The recent outperformance by BTC likely has much further to go.

Source: LSEG Workspace

 

The ratio

The BTC/Gold ratio has bounced lately, but note the wide range this pair tends to trade within. Also worth noting is the negative trend line in place since last summer. A close above it could make things much more squeezy in this “forgotten” pair.

Source: LSEG Workspace