Gold Plunges Below 4500! Stocks, Bonds, and Gold All Selling Off—Is Cash Really the Safe Haven King?

Gold fell below $4,500 on Friday, triggering intense volatility and re-pricing in global capital markets since the U.S.-Israel military action against Iran in late February 2026. Facing concerns over potential energy supply disruptions and inflation rebound due to the war, investors quickly adjusted their asset allocations. Recent data shows that traditional safe-haven assets like gold and U.S. Treasuries performed weakly during this crisis, while the S&P 500 also faced valuation downgrades. Meanwhile, the size of U.S. money market funds hit a record high, indicating a large-scale shift of funds into highly liquid assets. Is the market now entering a defensive phase where “cash is king”?

S&P 500 drops 5%, risk assets under pressure

After the Middle East conflict erupted, the S&P 500 came under significant pressure amid geopolitical turmoil. Rising oil prices increased corporate operating costs and rekindled fears of stagflation. With the Federal Reserve maintaining high interest rates, risk appetite for equities cooled markedly. High rates combined with war uncertainties weakened stock valuations, prompting institutional investors to reduce holdings defensively, leading to a temporary outflow of funds from the stock market. Since the outbreak of war, the S&P 500 has declined over 5%.

Gold’s safe-haven shine dims, down 14% since the conflict began

Since late February, when the U.S. and Israel launched strikes against Iran, gold briefly rose from $5,230 to over $5,500, but then declined, currently trading at $4,492, a drop of about 14%. Rising oil prices fueled inflation concerns, while stronger U.S. Treasury yields and the dollar contributed to gold’s decline. Additionally, amid broad asset declines, investors sold gold to cover losses elsewhere, leading to outflows from gold ETFs.

(Weekly gold price down 8%; could gold continue to fall amid Russia-Ukraine war?)

U.S. Treasury yields rise, bond prices face correction

U.S. Treasuries, traditionally viewed as safe assets, also felt the impact. Due to inflation fears, the 10-year U.S. Treasury yield surged from 3.95% to 4.386%, an increase of 11%. Since bond prices move inversely to yields, this rise indicates a significant decline in bond prices. This suggests that, with inflation risks unresolved, the duration risk of long-term Treasuries has increased substantially. Relying solely on Treasuries for geopolitical risk hedging is now under market scrutiny.

Cash is king? Funds flow into money market funds

Asset volatility has driven funds into highly liquid money market funds. According to Crane Data LLC, the size of U.S. money market funds recently soared to a record $8.276 trillion, an increase of $36 billion since late February.

With the Federal Reserve holding interest rates steady, money market funds offer low volatility, capital preservation, and high liquidity, making them attractive as “cash-like” assets. This data highlights that, when gold and Treasuries underperform, market funds are shifting toward a defensive stance where “cash is king.”

Bitcoin’s mixed performance, digital assets still risky

After the outbreak of war, Bitcoin dropped from around $68,000 to $63,000 but has since recovered to near $70,000, representing a nearly 4% gain. Does this mean Bitcoin has become a safe-haven asset during this conflict?

In reality, Bitcoin has fallen nearly 20% since a sharp decline last October. If the war persists, all assets may struggle to avoid downward pressure.

This article originally appeared on Chain News ABMedia: “Gold drops below 4500! Stocks, bonds, and gold all suffer—Is cash still the safest haven?”