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As the coronavirus outbreak continues to pressure global markets, Goldman Sachs said there’s one asset class that’s safe: gold.
“While so much about the current environment remains unclear, there’s one thing that isn’t: gold, which—unlike people and our economies—is immune to the virus,” Goldman Sachs head of global commodities research Jeff Currie said in a note to clients.
Gold rallied more than 2% during early trading Monday, although the precious metal is coming off its worst week since 2016. While gold is considered a safe haven asset since it typically retains its value during times of volatility, amid the broad wave of selling investors also reduced their exposure to gold, and on Friday prices fell 4.61% for the worst daily performance in nearly 7 years.
Still, Currie said that it’s the “currency of last resort and avoids the concern that paper currencies could be a medium of transfer for the virus.”
“As a result, gold has outperformed other safe haven assets like the Japanese Yen or Swiss Franc, a trend we see continuing as long as uncertainty around the full impact of COVID-19 remains,” he added.
Gold has gained 5% this year, far outpacing the S&P 500’s more than 8% decline.
– CNBC’s Michael Bloom contributed reporting.
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