Since japan reported 3rd consecutive current account deficit, ¥’s safe haven status has been put into question, and traditional correlations of risk assets (SPX, NKY) ↑ = USDJPY ↑ have broken down, with widespread implications- namely USD (& CHF, but not one of the major FX pairs) as now the sole safe haven currency if the new trend sustains.
USD holders are not the only participants in the global gold markets (obviously), Japanese are also active in gold. If ¥ is no longer a safe haven, then ¥ holders buy gold, which is partially why you recently saw a period of dollar ↑ + gold ↑. Gold in ¥ terms has diverged from gold in $, with gold/¥ outperforming gold/$ (as well as Tokyo Exchange listed SPY outperforming US listed SPY).
But as the market grapples with the tug of war transition from yen as safe haven vs yen as risk currency, you also see intraday gold price action deviate from the standard risk off = gold bid relationship. Yesterday as global markets continued to go risk off, selling equity indices -5% & UST yields hit record bottom, gold on the other hand sold off rather than rally alongside bonds- this was the “¥ still a safe haven” side of the argument regaining traction, and ¥ “denominated” gold holders with both ¥ and gold as choices to hide from risk took their recent gold profits and bought ¥.
USD holders are not the only participants in the global gold markets (obviously), Japanese are also active in gold. If ¥ is no longer a safe haven, then ¥ holders buy gold, which is partially why you recently saw a period of dollar ↑ + gold ↑. Gold in ¥ terms has diverged from gold in $, with gold/¥ outperforming gold/$ (as well as Tokyo Exchange listed SPY outperforming US listed SPY).
But as the market grapples with the tug of war transition from yen as safe haven vs yen as risk currency, you also see intraday gold price action deviate from the standard risk off = gold bid relationship. Yesterday as global markets continued to go risk off, selling equity indices -5% & UST yields hit record bottom, gold on the other hand sold off rather than rally alongside bonds- this was the “¥ still a safe haven” side of the argument regaining traction, and ¥ “denominated” gold holders with both ¥ and gold as choices to hide from risk took their recent gold profits and bought ¥.