Recent trade turmoil has driven investors toward safe-haven assets, and gold prices have soared, while U.S. Treasury bonds and the dollar, as competitive assets, have fallen.

Vivek Dhar, head of mining and energy commodity research at Commonwealth Bank of Australia, saidThis is related to the huge change in US trade policy under the rule of US President Trump. Gold has "filled the gap" and has become the market's first choice for safe-haven asset.

"What's unique about this recent demand for safe-haven assets is that the hedging attraction of the US dollar and U.S. Treasury bonds has caused them to be sold off," Dhar added.

Gold prices continued to hit new highs, hitting $3,500 an ounce on Tuesday, with more analysts predicting further rises. JPMorgan expects the precious metal to reach $4,000 in the second quarter of 2026 and an average of $3,675 per ounce in the fourth quarter of 2025.

Instead, U.S. Treasury bonds have sold off in recent weeks, with 30-year Treasury yields hitting their highest levels since November 2023 earlier this month. at the same time,USD IndexIt has been falling, and LSEG data shows that it has fallen by 8% so far this year.

Although the 30-year U.S. Treasury yield has risen by only about 2 basis points so far this year, the yield has soared by more than 30 basis points in a week after Trump announced peer tariffs — and the benchmark 10-year U.S. Treasury yield has also soared by 30 basis points. Meanwhile, LSEG data shows thatSpot goldPrices have risen by 25%.

While long-term U.S. Treasury yields have fallen from highs hit earlier this month and the dollar has strengthened slightly as Trump retracts remarks about firing Fed Chairman Powell, the position of U.S. assets among investors has taken a hit.

"While this is far from a story about the 'dollar extinction of the dollar', to be fair," John Reade, a strategist at the World Gold Council, noted.Confidence in the United States and its economy and key assets—the US dollar and U.S. Treasury bonds—has weakened。”

Why is the "gold rush" triggered?

The traditional negative correlation between Treasury yields and gold appears to have broken down. Generally, when yields are higher, the attractiveness of gold will decrease as the opportunity cost of holding gold that does not pay interest.

Michael Ryan, lecturer at the University of Waikato School of Accounting, Finance and Economics, saidGold's anti-inflation properties make it "special".

Ryan said tariffs are expected to push up U.S. inflation, which means higher interest rates will be higher in the future, which in turn puts pressure on U.S. Treasury bonds.

He added: “However, historically, gold has been considered a tool to evade inflation, which may explain why people prefer it – so,Perhaps it is gold, which is considered anti-inflation, that makes it ‘special’。”

Analysts believe thatAnother factor that led to the breakdown of traditional relations between gold and U.S. Treasury bonds is likely to be a decline in confidence in the U.S. and the “American Exceptionism” narrative.

"Trust on U.S. assets are weakening due to economic and geopolitical uncertainty," said Soni Kumari, commodity strategist at ANZ.

The market generally believes that Trump's trade war is a policy mistake, and gold is considered independent of any monetary and fiscal policy, which also enhances its appeal.

"Unlike currency or government bonds, gold does not carry credit risks and has nothing to do with the economic or political trajectory of a single country," said Alexander Zumpfe, senior precious metals trader of Heraeus. This is particularly important in times of wavering confidence in traditional financial instruments.

What further enhances gold's attractiveness is the weakening of the attractiveness of the US dollar. A weaker dollar usually makes commodities priced in dollar terms, including gold, more attractive to those holding other currencies.

Driven by diversification

Eli Lee, chief investment strategist at Bank of Singapore, said that compared with its developed market peers,Emerging market central banks have been under-allocating gold in the past. Now they have turned to gold and may continue to be strong buyers as they are spreading their dollar-denominated reserve holdings.

The recent sell-off of the US dollar has sparked discussions about global "de-dollarization", which has questioned the attractiveness of the US dollar as a world reserve currency, among which gold has been repeatedly proposed as a potential alternative major reserve currency.

Dhar said: "Countries realize thatGold may evade potential hedging of U.S. freezing currency reserves due to failure to follow its policies。”

Dhar added that while the dollar sell-off is good for gold, it limits its appeal given the cost of transporting and storing gold – and that gold is an asset that does not pay interest –It is still difficult to see a significant transfer of US dollar in the future。

Additionally, Todd Brighton, portfolio manager at Franklin Income Investors, said that while people have a little reassessment of the safe haven status of U.S. Treasury bonds, it is still "very difficult" to replace, given that it is the most liquid market in the world.

He said that as the world is turning to a more polarized world, U.S. Treasury bonds’ status as a safe haven asset will not be replaced in the near term. Gold remains the bank's projected outstanding asset. Franklin Income Investors believes that the combination of macroeconomic risks and relatively light investor positions has laid the foundation for further gains. The analyst said:We believe this – and other potential declines in the gold market – is an opportunity for investors to go long for gold。”