Gold outshines Treasurys, yen and Swiss franc year-to-date

SINGAPORE — Gold has claimed the safe haven crown. With spot prices surging 30% so far in 2025, bullion’s gains are outpacing that of other traditional safe havens such as the Japanese yen, Swiss franc, and U.S. Treasurys — compelling investors to rethink what true safety looks like in the face of fiscal sustainability concerns and looming wars.

At the heart of gold’s appeal is its freedom from government liabilities, market experts gathered at the annual Asia Pacific Precious Metals Conference told CNBC on Monday.

“Gold’s key advantage is that it is no one else’s liability,” said Nikos Kavalis, managing director at Metals Focus. “When an investor owns Treasurys, other sovereign bonds and even currencies, they are ultimately buying into the respective economy,” he said.

To take stock of the performance of other typical safe havens since the start of the year: The dollar index, which measures the value of the greenback against a basket of currencies, has weakened close to 10% in the year to date. Safe haven currencies such as the Japanese yen and Swiss franc strengthened about 8% and 10% against the dollar, respectively, in the same period of time.

Yields on the benchmark 10-year U.S. government bond is around 19 basis points lower in the year to date. Yields and prices move inversely in the bond market, meaning lower yields equal higher prices.

In contrast, gold prices have been consistently notching fresh highs for months. Spot gold has gained around 30% in the year to date, currently trading at $3,403.09 after peaking above $3,500 in April. Gold’s demand has been propelled by an atmosphere of instability and uncertainty, especially with recent developments in the Middle East, on top of dented demand for U.S. safe havens.

“There’s a growing sense of just not being sure what the future of the U.S. dollar and U.S. Treasury market is going to be. And I think that’s fueled a lot more interest in alternative safe havens like gold,” said the World Gold Council’s global head of central banks, Shaokai Fan.

Though the dollar and U.S. Treasurys have historically served as a bastion of financial safety, cracks have been starting to show.

U.S. Treasurys faced a steep sell-off in April after President Donald Trump’s “reciprocal” tariffs rollout. A subsequent exit from long-dated U.S. debt in May after Moody’s downgrade of the U.S.’ credit rating and Trump’s tax bill served as another beating to Treasurys’ long-held reputation as a safe haven as investors’ concerns about fiscal discipline heightened, with U.S. 30-year yields breaking above the key 5%.

Demand for U.S. debt instruments has since recovered slightly. However, confidence in U.S. assets has been compromised by volatile policymaking in the world’s largest economy.

“Gold as an asset is not affected by the high debt-to-GDP ratios that impact other currencies,” said global head of institutional markets at ABC Refinery, Nicholas Frappell, who added that the fiscal stance adopted by the U.S. and others remains relaxed despite alarm bells sounded by fixed income markets over unchecked debt growth.

U.S. bonds and the dollar were not the only ones whose safe haven reputation was dented. The Treasury rout in May was accompanied by a sell-off from other key markets as well, with investors bailing out of Japanese government bonds.

“Japan has ongoing structural issues too,” said World Gold Council’s Fan. He elaborated that the Japanese yen has been weak partly because of interest rate differentials.

Yields on the 10-year Japanese government bond has risen 39 basis points since the beginning of 2025, indicating a decline in demand. The Japanese yen appreciated about 8% against the dollar in the same period of time.

As the Bank of Japan has not raised rates as much as other central banks, it has been a “disincentive” for investors to move into the yen because of the interest rate differential, Fan said.

Japan’s central bank kept its policy rate steady at 0.5% for the second consecutive meeting in May, as concerns over Trump’s tariffs clouded the country’s economic outlook. It also held the benchmark rate at 0.5% in its June meeting on Tuesday in the face of rising growth risks.

The Swiss franc, another traditional safe-haven currency, has strengthened over 10% against the greenback since the start of the year.

However, the Swiss National Bank may be trying to discourage safe haven flows, which makes the Swiss franc less competitive, Fan said.

Back in March, the Swiss National Bank set its policy interest rate at 0.25%. Swiss consumer prices fell in May for the first time in over four years, which gave rise to some forecasts of negative interest rates in the upcoming policy meeting. 

“The Swiss franc is still very sexy, but the problem is [if] the Swiss now have negative rates, and if I buy a franc, I’m not getting a lot of returns,” said Bart Melek, head of commodity strategy at TD Securities. 

In that vein, gold stands out from other safe haven assets that are issued by and tied to government owners, industry experts told CNBC.

“Why gold stands out among the others is it is a large liquid market for one and also, it is apolitical,” Fan said. “All the other assets are issued by government owners. So it’s not fiat currency. Gold’s supply is limited by natural limitations, and I think that’s what makes it stand out as a safe haven asset. It’s not linked to any specific political risk,” Fan said.

And unlike sovereign bonds or fiat currencies, gold carries no counterparty risks, Melek said. “Gold’s got intrinsic value. It means that I don’t have to rely on a government or a private agent to execute my debt obligations to pay a coupon,” the strategist said.

Global central banks’ extensive purchases of gold also boosts its safe haven appeal, Melek added. In 2024, central banks added a net 1,044.6 tons of gold to their reserves, marking the third straight year that purchases have surpassed the 1,000-ton mark.

The European Central Bank also recently reported that gold overtook the euro to become the second-largest reserve asset, making up about 20% of global reserves at the end of 2024.