By Daniel Pechon
‘Is gold still a safe-haven asset, or is it set to become an outdated asset once again?’
Investors who had been hoping that gold would act as a safe haven in recent months, despite heightened geopolitical tensions, have been disappointed. Under pressure from a more hawkish Fed and a rising dollar, gold has lost some of its appeal. Gold, which peaked at over $5,600 in January, is struggling to stay above $4,000 six months later. This performance stands in stark contrast to that of 2025, when the price of gold rose by nearly 70 per cent.
The conclusion, however, is clear. Since February, when the war in Iran began, gold has fallen by nearly 25 per cent and is currently struggling to hold just above $4,000, whereas in January the precious metal had reached an all-time high of $5,600. Another finding is that gold futures fell by 13 per cent in the second quarter, their worst performance since 2013. Investors who had hoped that gold would act as a safe haven during this period were disappointed.
This fall can also be attributed, above all, to fears of inflation linked to rising energy costs, as well as concerns over a tightening of monetary policy in the United States, which has led to a rise in the value of the dollar – a development that has had a negative impact on the price of gold. Gold prices have begun to factor in inflation, which shows no sign of returning to more moderate levels. The question remains, however: does gold still constitute a diversification asset after experiencing turbulence against a backdrop of geopolitical tensions?
Gold retains its appeal
Despite this episode, the majority of experts remain convinced that gold is still a safe-haven asset in a portfolio. "The structural outlook for gold remains strong," says Asad Farid, portfolio manager at J. Safra Sarasin. “Gold is expected to retain its status as a safe-haven asset and an essential store of value.” "Central bank purchases, de-dollarisation and geopolitical tensions will be powerful drivers in the medium term," says the expert.
A common mistake investors make is to expect gold prices to move in a consistent manner, so as to directly offset falls in the stock market.
Gold can be seen as a direct hedge against the stock market, but should be viewed more as an excellent hedge against fear.
Frederik Fischer, Senior Multi-Asset Portfolio Manager at AllianzGI, highlights gold’s protective role in a context other than geopolitics: “We continue to regard gold as a cornerstone of the portfolio at a time of significant budget deficits and a loss of confidence in the traditional monetary system,” explains the expert.
The role of cover does indeed exist, but it is probably a little more irregular than one might think. It is not necessarily the case that, whenever there is a fall in share prices, gold is there to offset it.
To shed light on the events of recent months, the view of Tim Vanvaerenbergh, CEO of De Schelter IM, makes sense. Whilst gold was once used as a hedge against inflation and geopolitical and financial risks, the expert adds a further point to underpin gold’s protective role. “Today, gold behaves like a risk asset: when the markets are rising, gold rises, and vice versa.” "If you are looking for protection against inflation today, it seems best to consider a basket of commodities (gold, silver, aluminium, palladium, copper, etc.)."
The dollar…
Benjamin Huchet, a fund manager at Mandarine Gestion, offers a further perspective, suggesting that gold is regaining its role as a monetary asset.
The rise of a multipolar world, geopolitical fragmentation and the growing desire among states to reduce their dependence on the dollar are fuelling a sustained trend towards de-dollarisation, says Benjamin Huchet, who adds: “In this context, gold is fully regaining its role as a benchmark monetary asset: a universal, non-sovereign and politically neutral store of value.”
This institutional demand, driven in particular by central banks, acts as a floor on prices and limits the severity of market corrections. "It gives gold an asymmetric profile, one that is less dependent on traditional macro-financial cycles."
Moderator’s note
Some opinions are somewhat more mixed regarding the protective role of gold. “Gold is not a perfect hedge and can experience periods of underperformance and significant corrections, as has been the case during previous Bull markets,” says Alexandre Carrier of DNCA.
“During previous Bull markets in gold, particularly in the 1970s and 2000s, the metal experienced several significant correction phases, sometimes of around -30 per cent,” states the DNCA expert.
Finally, Pictet Asset Management offers some concluding remarks on the long-term performance of gold: “Over the long term, gold has managed to preserve its purchasing power and provide stability during financial shocks, even if it is not the perfect hedge.” “In the longer term, productivity gains driven by AI and stabilisation in the Middle East could temper inflation expectations, allowing gold to regain momentum.”
