SINGAPORE (Realist English). Gold has emerged as the leading safe haven in 2025, with spot prices rising nearly 30% since January and outperforming traditional hedges such as the Japanese yen, Swiss franc, and U.S. Treasurys. The surge reflects a growing loss of confidence in government-backed assets, as investors seek refuge amid mounting geopolitical tensions and questions over fiscal sustainability.
“Gold’s unique advantage is that it is not anyone’s liability,” said Nikos Kavalis, Managing Director at Metals Focus, during the Asia Pacific Precious Metals Conference on Monday. “When you own sovereign bonds or fiat currencies, you are ultimately betting on a government’s fiscal and political health. With gold, there is no such counterparty risk.”
A year of record highs
Spot gold is currently trading near $3,400 an ounce, after briefly surpassing $3,500 in April. The metal’s rally has been fueled by a combination of risk aversion, global conflicts, and waning demand for U.S.-denominated assets. In contrast, the U.S. dollar index has dropped almost 10%, while 10-year Treasury yields have fallen roughly 19 basis points, reflecting softening demand for U.S. debt.
Traditional safe haven currencies have fared better — the yen and Swiss franc have gained around 8% and 10%, respectively, against the dollar — yet their appeal is being questioned. “Structural challenges in Japan and deflationary pressures in Switzerland have undermined their safe haven status,” said Shaokai Fan, Global Head of Central Banks at the World Gold Council.
Investor confidence in Treasurys erodes
U.S. government bonds, long seen as a global benchmark for stability, have come under pressure following a series of market shocks. In April, investors fled Treasurys after President Donald Trump announced a wave of “reciprocal” tariffs. That was followed by a credit rating downgrade by Moody’s in May, triggering further outflows and sending 30-year yields above the critical 5% threshold.
Though demand has since recovered slightly, the political volatility behind U.S. fiscal policy — from tax cuts to ballooning deficits — has weakened global trust. “Gold is immune to debt-to-GDP ratios and partisan gridlock,” said Nicholas Frappell, Head of Institutional Markets at ABC Refinery.
Challenges for other havens
The yen, once a safe haven stalwart, has suffered due to Japan’s relatively low interest rates. The Bank of Japan kept its benchmark rate at 0.5% in May and June, even as growth risks increased due to trade friction and currency pressures. Yields on Japan’s 10-year bonds have risen 39 basis points year-to-date, indicating softening demand.
Meanwhile, the Swiss franc gained ground early in 2025 but may lose competitiveness due to the Swiss National Bank’s dovish stance. The SNB set rates at 0.25% in March, and May’s unexpected drop in consumer prices has raised speculation about a return to negative interest rates. “If real returns disappear, the franc becomes less attractive,” said Bart Melek, Head of Commodity Strategy at TD Securities.
Why gold is different
Gold is not issued by any state and is not tied to any specific fiscal or political regime — a key factor in its current strength. “It’s apolitical, liquid, and limited in supply by nature,” said Fan. “Unlike fiat currencies or sovereign bonds, it doesn’t carry counterparty risk.”
“Gold has intrinsic value,” added Melek. “It doesn’t rely on a government to pay a coupon. That’s what separates it from other assets in times of crisis.”
Support from global central banks has also played a role. In 2024, net gold purchases by central banks totaled 1,044.6 tons, marking the third consecutive year above the 1,000-ton threshold. The European Central Bank recently reported that gold had overtaken the euro as the second-largest global reserve asset, now comprising 20% of global holdings.
In an increasingly volatile world, gold is not just a hedge — it is becoming the anchor of last resort.
