How are safe-haven assets performing amid market turmoil triggered by tech, energy, and the French crisis?

As AI anxiety weighs on tech stocks, the Iran war drags on and keeps energy prices elevated, and lingering concerns about high government debt persist, demand for safe-haven assets is strong. Yet traditional safe-haven assets have not performed as expected this year: gold was sold off after the Iran war beganinvestors, facing losses in other assets, sold their best-performing holdings to raise cash; government bonds, once regarded as one of the safest assets globally, have also been highly volatile. Below is a rundown of several current safe-haven assets. 1) The "love-hate relationship" with the dollar Breaking last year's "sell America" theme, the dollar has climbed steadily since the Iran war began, rising 4% since late February. This reinforces its role as the go-to safe-haven asset in periods of global stress. A strong economy, higher interest rates, and the US's status as an energy exporter have all helped. But the factors that make traders question the dollar's long-term safe-haven status have not dissipatedfor example, more than $40 trillion in outstanding debt and policy uncertainty. The dollar is also vulnerable to tech stock selloffs, because it had previously benefited from record inflows into US equities amid optimism over the AI investment boom. Kit Juckes, chief FX strategist at France's Industrial Bank, said the dollar may be nearing the end of a bull market. "It won't go much further," he noted, but it is currently hard to find a basis for sustained short-dollar positioning, because "the big global story is: the dollar is an oil currency, and we are in an energy crisis." 2) Europe wobbles, buy the franc The bond turmoil triggered by France leads to one conclusion: when Europe wobbles, the franc is the safe haven of choice. So far this month, the franc has risen more than 2% against the euro, on track for its biggest monthly gain since late 2023. Georgette Boele, senior FX and oil strategist at ABN Amro, said: "Concerns about France's public finances, as well as election uncertainty in France and Spain, are supporting the franc." She added that investors are also increasingly reluctant to use the franc to fund carry trades, unwilling to build reverse positions in a currency with safe-haven attributes. Swiss interest rates are at 0%, which makes the franc popular in trades that "borrow in a low-yield currency and invest in higher-yielding assets elsewhere." Analysts said AI anxiety should also benefit the franc. 3) German Bunds are the relative winner Under the shock of fiscal concerns, government bonds' reputation as a safe-haven asset has been damaged. From the US to Japan, borrowing costs have recently hit multi-decade highs. However, the tech-led stock market selloff has revived some bond demand. Another notable change: earlier this month, when US and French 10-year government bond yields hit 24-year highs, German Bund yields moved lower as prices rose. Investors said this is a clear signalamong major economies, AAA-rated German Bunds stand out as a safe-haven asset. Bundesbank President Joachim Nagel said that amid the bond turmoil, Germany will remain Europe's anchor of stability and is "regaining health" after years of stagnation. Johnathan Owen, portfolio manager at TwentyFour Asset Management, said: "Everyone is worried about contagion in Europe, worried about whether Bunds will be dragged down along with (French government bonds) OATs and (Italian government bonds) BTPs, so it's a good thing that Bunds can serve as Europe's safe-haven tool." 4) Don't forget short-term bonds Investors said that, overall, elevated debt in major economies will continue to undermine the safe-haven status of long-term government bonds. But short-term government bonds can provide some shelter because they are less sensitive to debt concerns. Rory McPherson, chief market strategist at Wren Sterling, said: "We are very positive on short-term bonds. Given all the concerns about debt and deficits, we have not been buying longer-dated bonds." 5) Gold still has its shine Gold, another traditional safe-haven asset, has had a bumpy ride. After hitting a record high of $5,595 per troy ounce in January, gold prices fell as the Iran war began and investors tapped the precious metal amid losses in other assets. In August, gold rose again as inflation concerns resurfaced and the market worried the Federal Reserve was not doing enough to curb price pressures. Gold is currently trading around $4,175. Analysts said central bank gold buying and safe-haven demand are supporting prices above $4,000. Although higher interest rates should limit gold's upside, the tense geopolitical backdrop and concerns about US fiscal finances should continue to support the safe-haven metal further out. Carsten Menke, an analyst at Julius Baer, said: "Over a longer horizon, gold should again benefit from continued strong central bank buying and renewed market concerns about US debt and its rising interest burden."