The price of gold has tumbled amid shock waves from the tariff war between the United States and China, but the precious metal remains the safe-haven asset of choice in times of volatility, analysts said.
Analysts attributed the drop to short-term sell-offs by traders needing to cover losses from other asset classes.
Alex Chiu, senior exchange-traded fund (ETF) strategist at asset management firm Value Partners, said gold could be used to mitigate losses when the wider market was experiencing “abnormal volatility”.
“During market downturns … brokers may initiate a margin call that sells off gold to cover losses in other positions,” he said, adding that gold was an easily liquidated asset.
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Stock markets in Asia resume slump as hefty US tariffs on China take effect
Stock markets in Asia resume slump as hefty US tariffs on China take effect
Trump’s tariff onslaught has triggered a steep downturn in the world’s financial markets. Hong Kong’s benchmark Hang Seng Index slumped 13.2 per cent on Monday, wiping out HK$194 billion (US$25 billion) in value in its biggest decline since October 1997.
