Is Gold Still a Safe Haven Investment in 2025?

Gold has once again captured investor attention, trading near record highs as a volatile cocktail of geopolitical unrest, inflation persistence, and uncertain monetary policy stirs the global economy. The precious metal hit $2,230 per ounce in late March—just shy of its all-time high—prompting many to ask a familiar question: Is gold still the safe haven it once was?

With equity markets oscillating and bond yields rising, gold’s role as a defensive asset is under fresh scrutiny. Though the yellow metal has long been revered for its intrinsic value and status as a hedge against uncertainty, today's economic backdrop is far more complex than in past crises.

A Resilient Rally Amid Uncertainty

This year’s rally in gold prices has been driven by multiple interlocking forces: renewed geopolitical conflict in the Middle East, stubborn inflation in both the US and Europe, and heightened central bank activity in emerging markets.

Demand has also been robust from central banks, particularly in China, Turkey, and India, where gold buying remains a strategic hedge against US dollar volatility and potential sanctions exposure.

“Central banks are treating gold not just as a monetary hedge but as a geopolitical buffer,” says Helena Wirth, commodities strategist at Zurich-based Apollo Asset Management. “It’s a recalibration of trust away from fiat currencies.”

Inflation and Interest Rates: Friends or Foes?

Historically, gold has thrived in inflationary environments, yet the relationship is more nuanced when central banks are aggressively raising interest rates—as they have over the past year. Rising rates increase the opportunity cost of holding non-yielding assets like gold, often causing downward pressure.

However, the inverse has happened in 2025. Despite higher interest rates, gold prices have surged—defying conventional wisdom. Analysts suggest that the current rally reflects not just inflation concerns, but also broader anxiety about systemic risk and political instability.

“There’s a psychological component to gold that is underestimated,” notes David Nguyen, macro strategist at Commonwealth Global. “When trust in institutions weakens—even temporarily—gold becomes a proxy for that loss of faith.”

Gold vs. Other Safe Havens

Gold’s reputation as a store of value competes with other traditional safe-haven assets, notably US Treasuries, the Japanese yen, and the Swiss franc. However, Treasuries have faced selling pressure amid rising yields, and the yen has weakened due to persistent monetary easing by the Bank of Japan.

Gold’s non-sovereign nature has given it an edge in this environment, particularly for investors wary of currency devaluation or fiscal deterioration in developed economies.

Even cryptocurrencies—once dubbed "digital gold"—have not replicated gold’s defensive performance in times of stress. Bitcoin, despite its growing institutional acceptance, remains highly volatile and heavily correlated with risk assets.

The Case for Gold in Modern Portfolios

Institutional sentiment toward gold remains positive, particularly as a portfolio diversifier. According to the World Gold Council, holdings in gold-backed ETFs have increased for three consecutive months, reversing last year’s trend of persistent outflows.

Private wealth managers are also recommending gold as a tactical hedge. “We’re allocating between 5–10% to gold in client portfolios, depending on their exposure to high-beta assets,” says Laura Singh, CIO of Pacific Crest Advisors.

Meanwhile, retail interest is booming. US Mint data shows that sales of gold American Eagles rose 28% in Q1 2025 compared to the previous year. In Asia, demand for jewellery and bullion has remained steady, underscoring the enduring cultural affinity for the metal.

Risks and Headwinds

Despite its recent outperformance, gold is not without risks. A sudden de-escalation in geopolitical tensions or a decisive pivot by the Federal Reserve could sap momentum from the rally. Additionally, stronger-than-expected economic data might revive investor appetite for risk, shifting flows away from safe assets.

Another emerging concern is the potential for increased regulation of gold markets in response to its use in sanctions evasion or illicit finance. While not imminent, such moves could impact liquidity or trading behaviour.

Final Thoughts

Gold's role in 2025 reflects both its enduring legacy and its adaptability in a shifting economic order. It may not be the perfect hedge in every circumstance, but it continues to provide psychological and financial ballast in an increasingly unpredictable world.

In an era marked by fractured geopolitics and complex monetary dynamics, gold remains—if imperfectly—a beacon of stability.