Gold's Safe Haven Status Questioned

Gold, traditionally seen as a financial safe haven, has experienced significant price volatility, surging to an all-time high of nearly $5,600 per ounce in late January before losing approximately 20% of its value. This fluctuation occurred amidst geopolitical chaos and a major conflict in the Middle East, which caused an energy shock due to interrupted Petroleum supplies. The article argues that Gold's behavior is different in an energy crisis compared to financial crises (like the 2008 global financial crisis or the 2011 United States credit rating downgrade by S&P Global Ratings), where it previously demonstrated stronger safe haven qualities. The 'financialisation' of Gold, through derivatives and exchange-traded funds, has increased speculative investment and its correlation with broader market shocks, including those from the COVID-19 pandemic. This means Gold now absorbs more volatility from stock and energy markets, causing its price to fall during certain crises, as global industry prioritizes essential commodities like Petroleum.