Safety is where you find it

RUSSIA'S invasion of the Ukraine has, surprisingly, not been particularly good for gold. Gold is usually the go-to safe haven in times of tension and turmoil. To be sure, gold price has increased by around 6 per cent. But in the overall scheme of things, this is a minor blip.

The rally is an artefact of the Ukrainian situation, rather than a fundamental change in the trend. This conclusion is supported by analysis of the weekly gold chart.

Russia's invasion has brought one unexpected result. China's yuan (CNY) has emerged as a potential safe haven. The CNY/USD exchange rate has climbed above 6.31 yuan to the US dollar. This is the highest level in 4 years and it's part of a well-established downtrend. At 6.31 the CNY is still some way from the 2018 central bank re-adjustment low of 6.27. This is the behaviour usually associated with safe-haven currencies, so it is important to establish if this is also a conflict artefact, or a genuine re-assessment of the role the CNY plays in the global currency system.