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One kilogram of gold bars at the ABC refinery operated by Pallion in Sydney, Australia on Thursday, April 17, 2025.
Brendon Thorne | Bloomberg | Getty Images
Recent trade turmoil has brought investors to safe havens, while competing assets such as the U.S. Treasury and the U.S. dollar have fallen.
Vivek Dhar said it was related to the earthquake shift in earthquake trade policies under President Donald Trump, and the gold bars have “entered in invalid” because of the market’s safe haven choice.
“The reason this recent flight to security needs is so unique is that the security appeal of these U.S. assets has lowered the dollar and Treasury bonds,” Dhar added.
Gold prices have been expanding fresh highs to hit $3,500 an ounce on Tuesday, with analysts predicting further price gains. JPMorgan Chase expects gold metals to average an average of $3,675 per ounce per ounce by the fourth quarter of 2025 and to $4,000 by the second quarter of 2026.
Gold prices related to USD index futures over the past year
Instead, U.S. Treasury bonds have seen sell-offs in recent weeks, with 30-year yields being the highest since November 2023 earlier this month. Meanwhile, the U.S. dollar index has been sliding, weakening by 8% so far this year, according to LSEG data.
While 30-year fiscal yields have been earned about 2 basis points so far this year, the surge has exceeded 30 basis points within the week Trump announced the countdown tariffs – the benchmark 10-year yield also hit 30 basis points. Meanwhile, spot gold prices have risen 25% so far this year, according to LSEG data.
While the peak of popular singles earlier this month lowered the U.S. Treasury Department’s yields, and the dollar’s return has been slightly hit with Trump’s comments on the firing of Fed Chairman Jerome Powell.
“Although this is far from the ‘die of the dollar’ story, it can be said that confidence in the United States, its economy and its main assets, the dollar and the Treasury has been reduced,” John Reade, a market strategist at the World Gold Council, told CNBC.
Why the gold rush
Traditionally, the inverse relationship between treasury production and gold seems to have collapsed. Often, when yields are higher, the bar becomes increasingly attractive given the higher opportunity cost of holding gold because it does not pay interest.
Michael Ryan, a lecturer at the School of Accounting, Finance and Economics at the University of Waikato, said the inflationary quality of gold makes it “special”.
Ryan said tariffs are expected to increase U.S. inflation, which means higher interest rates in the future, which in turn puts pressure on the Treasury Department.
He added: “But gold is historically considered an inflation hedge, which may explain the preference for it – so maybe gold’s awareness of inflation hedging properties make it ‘special’.”
Unlike currency or government bonds, gold has no credit risk and is not associated with a country’s economic or political trajectory.
Another factor in analyzing the traditional relationship between Gold and the Treasury is the reduction in belief in the U.S. and “American Exceptionist” narrative, analysts told CNBC.
“Trust on U.S. assets are weakening due to economic and geopolitical uncertainty, due to economic and geopolitical uncertainty,” said Soni Kumari, commodity strategist at ANZ.
The market widely believes that Trump’s tariff war is a mistake, and the independence of gold from any monetary and fiscal policy increases its appeal.
“Unlike currency or government bonds, gold has no credit risk and is not related to a country’s economic or political trajectory,” said Alexander Zumpfe, a senior precious metals trader in Heraeus. This is especially relevant when confidence in traditional financial instruments is shaken.
The attraction of the dollar is the dim attraction of the dollar. Weaker dollars usually make commodities priced at green prices, including gold, more attractive to holders of other currencies.
Diversified Drivers
Singapore’s chief investment strategist Eli Lee said emerging market central banks are underweight against gold compared to developed markets, it has turned to gold metals and may remain strong buyers as they diversify from dollar-based reserves.
The recent dollar sell-off has Raises discussions about global sales valuequestioning the attractiveness of green as the world’s reserve currency.
Gold has floated Potential alternative to major reserve currencies several times.
“Countries realize that gold is a potential hedge against frozen currencies that are not aligned with U.S. policies,” said Dhar of the CBA.
Dahl said that while the dollar sell-off is good for gold, it is still difficult for people to see the future given the cost of transporting and storing gold, which is an asset that is not conducive to interests and limits its attractiveness.
Additionally, while some reassessment of the U.S. Treasury’s safe haven status, it is still “very difficult” in the end, given the way it is “the world’s most liquid market.”
He said once we move toward a more multipolar world, we won’t be taking over the U.S. Treasury in our safe haven.
