Morgan Stanley: Gold Behaves More Like a Risk Asset, Its Safe Haven Function Is Being Questioned

(1) Morgan Stanley metals and mining strategist Amy Gower stated that after six weeks of dramatic volatility in commodity prices, gold's traditional role as a portfolio risk management tool is being called into question. (2) She pointed out that gold is now behaving more like a risk asset rather than a safe haven; it was originally intended to serve as a diversification tool within investment portfolios, but this function is currently not being realized. (3) She acknowledged that it is "normal" for gold prices to weaken after a shock, as investors rush to seek liquidity, but gold prices are increasingly being influenced by trading activities of large holders, such as central banks and ETFs.