Gold has emerged as the leading safe haven asset in 2025, with spot prices soaring approximately 30% year-to-date. This outperformance surpasses that of traditional refuges such as the Japanese yen, Swiss franc, and U.S. Treasurys, prompting investors to reconsider what true financial safety means amid rising fiscal concerns and geopolitical tensions.
At the annual Asia Pacific Precious Metals Conference, market experts emphasized gold’s unique advantage: it is free from government liabilities. Nikos Kavalis, managing director at Metals Focus, told CNBC, “Gold’s key advantage is that it is no one else’s liability. When investors buy Treasurys or sovereign bonds, they are essentially investing in the issuing economy’s creditworthiness.”
Since the start of the year, the dollar index—which tracks the greenback’s value against a basket of currencies—has weakened nearly 10%. Meanwhile, the Japanese yen and Swiss franc have gained around 8% and 10%, respectively, against the dollar. The benchmark 10-year U.S. Treasury yield has dropped roughly 19 basis points, reflecting higher bond prices.
In contrast, gold has steadily hit new highs, reaching $3,403 per ounce after peaking above $3,500 in April. This surge has been fueled by heightened global instability, including recent Middle East developments, alongside diminished confidence in U.S. safe-haven assets.
Shaokai Fan, global head of central banks at the World Gold Council, noted, “There’s growing uncertainty about the future of the U.S. dollar and Treasury market, which has increased interest in alternative safe havens like gold.”
Eroding Confidence in Dollar and Treasurys
Historically, the U.S. dollar and Treasurys have been the cornerstone of financial safety. However, cracks are appearing. In April, Treasurys faced a sharp sell-off following President Trump’s tariff announcements. Investor confidence further weakened after Moody’s downgraded the U.S. credit rating in May and amid concerns about fiscal discipline, pushing the 30-year Treasury yield above 5%.
Although demand for U.S. debt has somewhat rebounded, volatile U.S. policy-making continues to undermine confidence in these traditional safe havens.
Why Gold Stands Apart
Nicholas Frappell, global head of institutional markets at ABC Refinery, explained, “Gold is not affected by the high debt-to-GDP ratios that weigh on currencies. Despite warnings from fixed income markets about unchecked debt growth, fiscal policies remain loose in the U.S. and elsewhere.”
The safe haven status of other assets has also weakened. Japan’s government bonds experienced selling pressure alongside Treasurys in May. The 10-year Japanese government bond yield has risen 39 basis points this year, signaling reduced demand, even though the yen appreciated 8% against the dollar.
Fan attributed the yen’s relative weakness partly to interest rate differentials. Japan’s central bank has kept policy rates steady at 0.5% amid economic uncertainty triggered by trade tensions. This lower yield compared to other countries has discouraged investors from moving capital into yen-denominated assets.
The Swiss franc, another traditional refuge, has gained over 10% against the dollar since January. Yet, the Swiss National Bank appears to be discouraging safe-haven inflows by maintaining low or possibly negative interest rates, making franc holdings less attractive.
Bart Melek, head of commodity strategy at TD Securities, said, “The Swiss franc remains appealing, but negative rates mean investors get little return, limiting its safe haven appeal.”
Gold’s Unique Attributes Boost Its Appeal
Unlike fiat currencies and sovereign bonds, gold is not tied to any government and carries no counterparty risk. Fan emphasized, “Gold is apolitical and constrained by natural supply limits, making it a uniquely stable asset.”
Melek added, “Gold has intrinsic value. You don’t depend on any entity to fulfill debt obligations or pay coupons.”
Further reinforcing gold’s standing, global central banks have increased gold purchases significantly. In 2024, central banks added over 1,000 tons of gold to their reserves for the third consecutive year.
The European Central Bank recently revealed that gold surpassed the euro to become the second-largest reserve asset worldwide, accounting for about 20% of global reserves at the end of 2024.
Conclusion
With fiscal uncertainties mounting and geopolitical risks rising, gold’s role as a secure, non-sovereign asset has propelled it ahead of traditional safe havens in 2025. Investors seeking stability are increasingly turning to bullion as the preferred sanctuary in volatile times.
