Anyone who regularly follows the state of the financial markets has noticed at least one thing: the value of the dollar is soaring, while the values of other traditionally strong currencies, such as the euro, the yen and the Swiss franc, are falling. So much so that the euro has reached parity with the dollar, whereas less than a year ago it was trading at 1.20 dollars. But shouldn't this situation benefit the yellow metal? Here are some explanations.

Increasingly uncertain financial markets

Just a few months ago, it was said that gold had been dethroned as the ultimate safe haven. Indeed, since the end of 2021, we have observed a loss in the value of the metal, particularly in favour of the dollar.

Some did not hesitate to say that the time for gold was now past. Others even argued that crypto-currencies, NFTs and other tokens were now the ultimate safe havens. In other words, the ultimate in protection against economic and financial crises.

However, the war in Ukraine, the rise in oil prices, the affirmation of the dollar as the strongest currency against all others, and the marasms linked to the rise in commodity prices have taken their toll on these crypto-currencies. For example, the value of Bitcoin, the ultimate cryptocurrency, has lost 70% of its value in the space of six months.

A favourable climate for gold?

Could the current climate of uncertainty in France and around the world be good for gold? History has shown us time and again that financial crises and the loss of confidence in our institutions often allow gold to be considered once again as one of the main, if not the only, safe havens.

Today, gold is priced in dollars. The continuous rise of the North American currency directly influences the price of gold. In other words, buying gold is more expensive for those who do not buy in dollars. As such, the metal is less attractive to many investors.

If gold is suffering, for the time being, from the soaring dollar and rising interest rates, there is no reason to believe that this will continue to be the case in the months to come. However, the spectre of recession, both in Europe and the US, could help gold's fortunes. The loss of confidence in the financial markets of both the Old and New Worlds could well contribute to a renewed interest in gold.

In reality, it is all a question of proportion. Today, physical gold can perfectly well take its place in an investment portfolio, alongside other so-called safe havens, such as ETFs or index funds. Introducing 4 or 5% of gold in one's investments can be interesting in this respect.