Ever since the geopolitical tensions in the Middle East where top Iranian military commander Qassem Soleimani died, the incident is the main explainer for why gold reached six-year highs. Now when in the recent days the Swiss Franc is surging, Goldman Sachs Co-Head of Global Foreign Exchange Zach Pandl believes it could be because it may be being used as a proxy for gold. He says that CHF follows gold in terms of price swings. Pandl said that on Monday morning it was trading around $1,03.
Ever since January 16 when CHF reached its 2 year low, it is on a constant rise.
Back in history, around the 1900s, the Swiss Franc was outperforming all the other currencies. Pandl explains this by saying that CHF had close ties with gold back then.
“The Swiss constitution required CHF to be backed by gold reserves until mid-1999, and the country aggressively defended the franc’s parity with gold until 1936, by which point most countries, such as the U.S. and U.K., had already substantially devalued their currencies,” he said.
Also, gold, as mentioned above, recently reached six-year highs in terms of price. It climbed above $1,600 per troy ounce on January 7, but now steadily sits at around $1,560.
“While the drivers of recent performance are not entirely clear-cut, we believe the surge in geopolitical tensions may have motivated investor demand for CHF, much as it has driven demand for gold,” explained Pandl.
However, he believes that this trend won’t go on for long. He says that the Swiss Franc is likely to weaken over 2020 against the dollar and the euro. Also, while he believes the CHF should become weaker, he added that “it might be too soon to fade just yet”.
As Coinspeaker previously reported, not only gold but also palladium jumped to new all-time highs. It hit $2,103.04 per ounce and continued trading above the $2,100-mark as investors turned to safe havens.
The price of BTC also surged to new recent day highs following the tensions in the Middle East. Currently, it is trading around $8,650. The other top 3 cryptocurrencies – Ethereum and XRP – follow a similar path. ETH now is trading at $166.18 while XRP is at $0,23.
Janis is a cryptocurrency enthusiast and a bitcoin adherent. He has a background in video production, but for the past couple of years, he is a full-time crypto researcher and writer. He has a good understanding of multiple cryptocurrencies and loves to cover daily news. He considers himself a semi-bitcoin maximalist but always is open to any kind of new ideas that could be put on the blockchain. In his free time, he likes skateboarding and cars.