The U.S. dollar and Japanese yen could emerge as the strongest safe-haven currencies if gold prices continue declining, according to analysts at Standard Chartered.
In a research note published Monday, Standard Chartered strategist Steve Englander highlighted the growing vulnerability of gold. He suggested that investors seeking protection from market turbulence could increasingly turn toward the dollar and yen.
Gold has already dropped significantly below the $4,000-per-ounce level, leaving its short-term technical outlook vulnerable. According to Englander, the next important support levels stand at $3,800 and $3,500.
Gold Price Decline Raises Safe-Haven Concerns
The recent weakness in gold reflects mounting uncertainty across global financial markets. Concerns surrounding the technology sector, declining equity prices, and rising liquidity requirements have encouraged investors to sell highly liquid assets, including gold and silver.
Englander explained that gold’s traditional role as a safe-haven investment could temporarily weaken when investors urgently need cash.
Consequently, liquidity demands may outweigh gold’s appeal as a defensive asset during periods of heightened market volatility.
Furthermore, the relationship between gold and the U.S. dollar could play an important role in determining the next market moves.
Over the past year, gold has maintained a strongly negative correlation with the dollar. This pattern suggests that some investors may have reduced their dollar holdings to increase exposure to the precious metal.
However, Standard Chartered believes these investment flows could reverse if gold prices continue falling.
U.S. Dollar and Japanese Yen Could Outperform
According to Standard Chartered, the U.S. dollar and Japanese yen are positioned to outperform other major currencies if gold experiences further selling pressure.
The bank argues that the number of attractive safe-haven alternatives has narrowed considerably.
Several major currencies face challenges that could limit their ability to attract investors during periods of financial uncertainty.
The euro continues to face political and fiscal concerns, while the Swiss franc offers the lowest yield among G10 currencies. Meanwhile, the British pound remains exposed to political uncertainty.
Additionally, the Australian dollar experiences significantly greater volatility, making it less attractive during sharp market downturns.
Against this backdrop, the U.S. dollar could become an increasingly appealing destination for investors looking to reduce risk.
Why the Japanese Yen Could Attract Investors
Beyond the dollar, Standard Chartered also identifies the Japanese yen as a potentially attractive safe-haven currency.
Englander suggested that central banks seeking to diversify their foreign exchange reserves away from the U.S. dollar could increase their exposure to the yen.
Recent improvements in Japanese government bond yields may strengthen the currency’s appeal by offering investors more attractive returns.
Moreover, the yen’s relatively low valuation and historically limited sensitivity to broader market movements could support its performance during periods of financial stress.
These characteristics may become particularly important if market turbulence originates from declining asset prices rather than rising oil prices.
Safe-Haven Currency Outlook as Gold Faces Further Pressure
Overall, Standard Chartered’s analysis suggests that investors may increasingly favor the U.S. dollar and Japanese yen if gold extends its downward trend.
With gold trading below the psychologically important $4,000 level, attention is shifting toward the $3,800 and $3,500 support areas.
A sustained decline could encourage further portfolio adjustments, potentially benefiting both currencies as demand for defensive assets changes.
Nevertheless, the outlook will depend on broader financial conditions, investor liquidity requirements, and the direction of global risk sentiment.
