The Role of Gold as a Safe-Haven Asset amid Diplomatic Turmoil and The Trump Trade War

Wawan Irawan, Wenni Anggita (), Yanto Yanto, Ariandi A. Zulkarnain and S. M. Afdal
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Wawan Irawan: Ural Federal University
Wenni Anggita: Universitas Bangka Belitung
Yanto Yanto: Universitas Bangka Belitung
Ariandi A. Zulkarnain: Universitas Bangka Belitung
S. M. Afdal: Universitas Bangka Belitung

A chapter in Proceedings of the 2nd International Conference of Economics, Management, Accounting, and Business Digital (ICEMAB 2025), 2025, pp 155-162 from Springer

Abstract: Abstract This study aims to analyze the effect of stock market volatility (VIX), USD/CNY exchange rate, inflation (CPI), and trade war dummy variables on global gold prices during the 2016–2022 period. The background of this research stems from the rising global economic uncertainty during Donald Trump’s administration, particularly due to the U.S.–China trade war, which allegedly drove investors to shift their portfolios toward safe assets such as gold. The data used are secondary time-series data obtained from the Federal Reserve Economic Data (FRED), World Gold Council (WGC), and International Monetary Fund (IMF). The analytical method employed is multiple linear regression using the Ordinary Least Squares (OLS) approach through EViews 12 software, complemented by stationarity testing (ADF), cointegration analysis, and classical assumption tests. The results indicate that stock market volatility (VIX), USD/CNY exchange rate, and the trade war dummy variable have a positive and significant effect on global gold prices. In contrast, inflation (CPI) has no significant effect on gold prices, implying that global price stability during the observation period weakened gold’s role as a hedge against inflation. These results are consistent with the safe haven asset theory and support the view that gold continues to serve as a protection instrument in times of economic and political turbulence. The implications of this study highlight the importance of gold as a strategic asset for investors and policymakers in responding to global uncertainty. For investors, gold can serve as a portfolio diversification tool during geopolitical tension, while for governments and financial institutions, the findings emphasize the need for exchange rate stabilization and risk mitigation policies against global market fluctuations.

Keywords: Safe Haven; Stock Market Volatility; USD/CNY Exchange Rate; Trade War (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-974-2_23

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DOI: 10.2991/978-94-6463-974-2_23

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