"Dollar, Yen and Swiss franc preferred as risk aversion currencies  ..."

"Dollar, Yen and Swiss franc have more upside in a situation of risk aversion.."

“If there was a double-dip recession, increasing risk aversion, some assets are going to be preferred, and gold will be one of them,” Roubini said today. “But in that situation, things like the dollar, the yen, the Swiss franc have more upside in a situation of rising risk aversion because they are much more liquid than the gold market.”

Investors are dashing to hold securities deemed to be among the most secure in a slowdown as evidence mounts that the U.S. rebound from the worst recession since World War II is running out of steam. The Swiss franc rose to a record against the euro on Aug. 31 and the yen last month reached its strongest level against the dollar since 1995.

The price of gold has risen 14 percent this year and traded at $1,242.15 an ounce as of 2:09 p.m. in London.

“I believe that gold is going to trade around current levels,” Roubini said in Cernobbio, Italy. “There are two extreme events that lead to a spike in gold. One is inflation, but we have no inflation in advanced economies. If anything, there is a risk of deflation.”

“The other event in which gold prices go up is the risk of a global financial meltdown, and that tail risk has been reduced because we backstopped the financial system,” he said.

Headwinds

Roubini, who forecast the U.S. recession more than a year before it began, today predicted that the U.S. economy is set to slow in the second half of the year as “tailwinds” such as fiscal stimulus and inventory adjustment become “headwinds.”

“We can try to prevent double-dip recession, but the idea we are going to have rapid recovery of growth to potential in advanced economies -- U.S., Europe, Japan -- is mission impossible,” he said.

Companies in the U.S. added more jobs than forecast in August, easing concern the economy was falling back into a recession. Private payrolls that exclude government agencies climbed 67,000, after a revised 107,000 increase in July that was more than initially estimated, Labor Department figures in Washington today showed. 

‘Like a Recession’

“Job creation is going to be very, very mediocre,” Roubini said before the data were published. “It’s going to feel like a recession even if we’re not in a recession.”

Roubini also said the underlying problem is that developed- economy debts need to be reduced, which will take time and require an extended period of slow growth, he said.

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