Gold has emerged as the premier safe-haven asset in 2025, with spot prices soaring approximately 30% year-to-date, outpacing traditional havens such as the Japanese yen, Swiss franc, and U.S. Treasurys. This shift is prompting investors to reconsider what true financial safety means amid concerns over fiscal sustainability and geopolitical risks.
At the recent Asia Pacific Precious Metals Conference, market experts highlighted gold’s unique appeal: unlike government-issued assets, gold carries no counterparty risk or sovereign liability. “Gold’s key advantage is that it is no one else’s liability,” said Nikos Kavalis, Managing Director at Metals Focus. “Investors buying Treasurys, sovereign bonds, or currencies are ultimately tied to the issuing economy.”
Safe Haven Currencies and Bonds Lag Behind
Since the start of 2025, the U.S. dollar index has weakened nearly 10%, while the Japanese yen and Swiss franc strengthened roughly 8% and 10%, respectively, against the dollar. Meanwhile, the benchmark 10-year U.S. Treasury yield has fallen about 19 basis points, signaling rising bond prices. Yet, gold’s performance eclipses all, consistently hitting new highs and currently trading near $3,403 an ounce after peaking above $3,500 in April.
The metal’s rally is fueled by growing uncertainty — especially with the escalating Middle East tensions — alongside diminished confidence in U.S. safe-haven assets. Shaokai Fan, Global Head of Central Banks at the World Gold Council, explained: “There’s a growing sense of uncertainty about the future of the U.S. dollar and Treasury market, which has fueled interest in alternative safe havens like gold.”
Cracks in Traditional Safe Havens
The reputation of U.S. Treasurys as a safe haven has been tested by several recent developments: President Trump’s tariff policies triggered a steep sell-off in April, while Moody’s downgrade of the U.S. credit rating in May intensified market jitters. Yields on long-dated U.S. debt climbed above 5%, undermining demand. Although some recovery has occurred, volatile U.S. policymaking continues to erode confidence.
Other safe havens have also shown vulnerabilities. Japan’s government bonds experienced sell-offs amid structural economic challenges and rising yields, despite the yen’s modest appreciation. The Bank of Japan has kept policy rates near zero, limiting yen’s attractiveness due to interest rate differentials. Similarly, the Swiss franc strengthened over 10%, but the Swiss National Bank’s low or potentially negative interest rates may discourage inflows.
Why Gold Stands Apart
Gold’s intrinsic qualities set it apart from government-issued assets. Nicholas Frappell, Global Head of Institutional Markets at ABC Refinery, emphasized that gold is unaffected by high debt-to-GDP ratios that weigh on currencies. “Gold’s supply is naturally limited, apolitical, and does not carry counterparty risk,” Fan added. Unlike fiat currencies or sovereign bonds, gold ownership does not depend on any issuer’s promise to pay.
This intrinsic value is increasingly recognized by global central banks. In 2024, they collectively purchased over 1,000 tonnes of gold for the third consecutive year. The European Central Bank recently reported that gold has surpassed the euro as the second-largest reserve asset, now comprising about 20% of global reserves.
