(Bloomberg) -- Should U.S. foreign-exchange policy spur a global currency conflict, Deutsche Bank AG sees gold as the ultimate victor.

The possibility of U.S. FX intervention has created some buzz among Wall Street analysts after President Donald Trump took aim at China and Europe this month, saying they’re playing a “big currency manipulation game.” A U.S. attempt to weaken the dollar -- a step it hasn’t taken since 2000 -- could prompt other nations to combat the intervention, sparking a “true currency war” probably involving the yuan and euro, according to Deutsche Bank strategist Alan Ruskin.

“With a currency war most likely to be fought on USD/CNY and EUR/USD terrain, one approach would be to steer clear of the direct conflict,” Ruskin wrote in a note Monday. “By far the most direct and simple way to trade the complexities of a currency war is by going long gold.”

Gold has climbed 10% this year amid deepening U.S.-China trade tensions and climbing wagers on a Federal Reserve rate cut. The metal touched a six-year high last month, and hedge funds are close to their most bullish levels since 2017.

Trump has expressed concern that the dollar’s strength will undermine his economic agenda, which has also fueled his criticism of the U.S. central bank. A Fed trade-weighted measure of the greenback is close to the strongest since 2002, exerting a drag on American exports.

While intervention would lack the element of surprise, and valuations don’t make a compelling case for action, Trump may get his wish for a weaker dollar if greenback sales accompanied monetary easing, Ruskin wrote. The Fed is widely expected to lower rates later this month.

“If (to our surprise) intervention is enacted on a scale that goes far beyond past interventions, and is timed to go with Fed rate cuts, it would be significant in reinforcing a dollar top,” Ruskin wrote.

--With assistance from Justina Vasquez.

To contact the reporter on this story: Katherine Greifeld in New York at kgreifeld@bloomberg.net

To contact the editors responsible for this story: Benjamin Purvis at bpurvis@bloomberg.net, Mark Tannenbaum, Nick Baker

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