Work

Navigating crises: Gold's role as a safe haven for U.S. sectors

Year: 2024

Type: article

Abstract: • Analysis of gold's safe haven properties during GFC, COVID 19, and the ukraine war. • Gold is not a safe haven for energy, materials, utilities, and consumer staples sectors. • Financials, tech, healthcare, and industrials see strong safe haven effects from gold. • Gold's safe haven role varies by sector, influenced by interest rates and cyclic trends. • The banking sector benefits the most from gold as safe haven. This paper investigates the correlation between U.S. sectors and gold, and whether gold can serve as a safe haven for investors in specific U.S. sectors during the global financial crisis, COVID-19, and the Russia-Ukraine war. We use data from the Standard & Poor's Depository Receipts (SPDR) Select Sector Exchange Traded Fund (ETF) to capture the performance of the respective sectors. Our findings document that gold is a weak safe haven for most U.S. sectors. Gold is not a safe investment for energy, materials, utilities, and consumer staples. Gold does provide vital protection for financial, consumer discretionary, industrial, technology, and healthcare.

Source: Finance research letters

DOI: 10.1016/j.frl.2024.106210

Authors: Harald Kinateder, Ikhlaas Gurrib, Tonmoy Choudhury

Institutions: University of Passau, Canadian University of Dubai, S P Jain School of Global Management

Language: English

Topic: Market Dynamics and Volatility

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,350

Funder: King Fahd University of Petroleum and Minerals