If a war breaks out, XAU/USD will typically see an increase in price. Hereโs why:
1. Safe Haven Asset:
Gold is considered a safe haven, such as war, investors tend to buy gold to protect their assetsโ value.
2. Decline in Fiat Currencies:
War can put pressure on fiat currencies (including the USD)
3. Market Uncertainty:
Fear and uncertainty in global financial markets tend to drive investors toward gold as a safe place to store value.
4. Increased Demand:
In times of war, countries may increase demand for gold to support their finances.
The final outcome depends on how these two factors interact. Got it ?