Why gold prices went nowhere despite rush to safe-haven assets

Italy’s political crisis caused a serious round of market nerves overnight, as money poured out of riskier investments such as stocks. And it moved back into traditional safehaven assets, which saw the yield on US 10-year bonds fall back below 2.8 per cent for the first time since April. There was also demand for the Japanese yen, as the USD/YEN pair fell by almost 1 per cent. But prices for gold — which rounds out the trio of traditional safe-havens — went nowhere.

The precious metal edged higher, but more or less hung around near its recent level at $ 1,300 an ounce. Jordan Eliseo, chief economist at ABC Bullion, attributed the moves to a stronger US dollar and the recent reversal of bullish trading positions in the gold market.

“You’d typically expect to see a move toward safe-haven assets support the yellow metal, especially when equities take a hit, but it’s not playing out that way this time,”

Eliseo said. “Renewed concerns of the euro currency, and the subsequent US dollar strength are stronger factors in the market right now.” That’s served to weigh on gold prices, which historically have moved inversely to the US dollar.