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

DOI

10.2991/978-94-6463-974-2_23How to use a DOI?

Keywords

Safe Haven; Stock Market Volatility; USD/CNY Exchange Rate; Trade War

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.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Wawan Irawan
AU  - Wenni Anggita
AU  - Yanto Yanto
AU  - Ariandi A. Zulkarnain
AU  - S. M. Afdal
PY  - 2025
DA  - 2025/12/25
TI  - The Role of Gold as a Safe-Haven Asset amid Diplomatic Turmoil and The Trump Trade War
BT  - Proceedings of the 2nd International Conference of Economics, Management, Accounting, and Business Digital (ICEMAB 2025)
PB  - Atlantis Press
SP  - 155
EP  - 162
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-974-2_23
DO  - 10.2991/978-94-6463-974-2_23
ID  - Irawan2025
ER  -