Amid global financial uncertainty and ongoing U.S. trade policy disruptions, gold is displaying key characteristics of High-Quality Liquid Assets (HQLAs), according to new research from the World Gold Council (WGC). The study positions gold as a viable alternative to traditional safe-haven assets such as U.S. Treasuries.
HQLAs are defined as assets that can be quickly and easily converted into cash with minimal loss of value, even in periods of market stress. The WGC’s analysis, which focused on the past six months — a period marked by heightened bond market volatility — found that gold consistently met or outperformed several benchmarks typically associated with HQLAs.
Gold Proves Resilient Amid Treasury Market Volatility
According to the WGC report, gold maintained stable performance even during episodes of heightened market stress. In early February 2025, when U.S. Treasury markets were rattled by sudden tariff announcements and saw unusual sell-offs, gold remained notably steady. Again in April, as bond volatility surged, gold’s price rose to record highs, reinforcing its role as a flight-to-quality asset.
“Gold’s performance matched or exceeded that of benchmark assets like the 10-year Treasury, reinforcing gold’s resilience and liquidity,” the report noted.
Gold’s average daily volatility stood at 0.027%, closely in line with the 30-year U.S. Treasury’s 0.028%, and its intraday bid-ask spread averaged 2.2 basis points — slightly wider than that of the 10-year Treasury but narrower than the 30-year.
Trading Volume Rivals U.S. Treasuries
Between November 2024 and April 2025, gold’s average daily trading volume in the London Bullion Market Association (LBMA) over-the-counter (OTC) market reached an impressive $145 billion. This figure is comparable to the $143 billion in daily average trading volume recorded for 7–10-year U.S. Treasuries over the same period.
These figures underscore gold’s deep and liquid market, a key requirement for HQLA designation under global regulatory standards.
A Unique Safe-Haven Asset
The WGC emphasized that gold carries no credit risk, is globally recognized, and remains highly liquid across markets — qualities that make it uniquely suited to qualify as a Level 1 HQLA under international liquidity frameworks. Level 1 HQLAs are the most reliable in times of stress and include assets like central bank reserves and top-rated sovereign debt.
“Gold has consistently demonstrated characteristics associated with HQLAs — including low volatility, tight bid-ask spreads, and robust trading volumes — even during financial turmoil,” the WGC concluded.
As financial markets navigate the twin challenges of policy uncertainty and rising geopolitical risk, gold’s role as a trusted liquidity buffer may become more prominent, not only for investors but also for institutions managing regulatory capital requirements.
