Safe haven

A safe haven refers to an investment asset that is expected to retain or increase its value during periods of market turbulence and economic uncertainty. Investors typically seek these assets to protect capital from losses when riskier investments decline. Common examples include specific national currencies like the US Dollar, Japanese Yen, and Swiss Franc, along with physical gold and highly-rated government bonds, which see increased demand during global crises.

For retail traders, safe haven assets can offer perceived security during periods of high market stress, but their price movements can become highly volatile. Rapid shifts in global sentiment often lead to sudden spikes in demand, causing significant price swings. This can result in increased spread costs and potential slippage on trades, especially during news events. Relying solely on safe haven status without considering market structure and liquidity can expose traders to unexpected losses.